Correlation Between Gladstone Investment and LendingClub Corp
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and LendingClub Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Gladstone Investment and LendingClub Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and LendingClub Corp, you can compare the effects of market volatilities on Gladstone Investment and LendingClub Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Gladstone Investment with a short position of LendingClub Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and LendingClub Corp.
Diversification Opportunities for Gladstone Investment and LendingClub Corp
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gladstone and LendingClub is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and LendingClub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingClub Corp and Gladstone Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Gladstone Investment are associated (or correlated) with LendingClub Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LendingClub Corp has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and LendingClub Corp go up and down completely randomly.
Pair Corralation between Gladstone Investment and LendingClub Corp
Given the investment horizon of 90 days Gladstone Investment is expected to under-perform the LendingClub Corp. But the stock apears to be less risky and, when comparing its historical volatility, Gladstone Investment is 2.76 times less risky than LendingClub Corp. The stock trades about -0.06 of its potential returns per unit of risk. The LendingClub Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,382 in LendingClub Corp on October 24, 2024 and sell it today you would earn a total of 283.00 from holding LendingClub Corp or generate 20.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. LendingClub Corp
Performance |
| Timeline |
| Gladstone Investment |
| LendingClub Corp |
Gladstone Investment and LendingClub Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and LendingClub Corp
The main advantage of trading using opposite Gladstone Investment and LendingClub Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, LendingClub Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in LendingClub Corp will offset losses from the drop in LendingClub Corp's long position.| Gladstone Investment vs. PennantPark Floating Rate | Gladstone Investment vs. Horizon Technology Finance | Gladstone Investment vs. Stellus Capital Investment | Gladstone Investment vs. Prospect Capital |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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