Correlation Between Goldman Sachs and LendingClub Corp
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs 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 Goldman Sachs and LendingClub Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Group and LendingClub Corp, you can compare the effects of market volatilities on Goldman Sachs 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 Goldman Sachs with a short position of LendingClub Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and LendingClub Corp.
Diversification Opportunities for Goldman Sachs and LendingClub Corp
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Goldman and LendingClub is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and LendingClub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingClub Corp and Goldman Sachs 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 Goldman Sachs Group 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 Goldman Sachs i.e., Goldman Sachs and LendingClub Corp go up and down completely randomly.
Pair Corralation between Goldman Sachs and LendingClub Corp
Allowing for the 90-day total investment horizon Goldman Sachs is expected to generate 1.3 times less return on investment than LendingClub Corp. But when comparing it to its historical volatility, Goldman Sachs Group is 2.11 times less risky than LendingClub Corp. It trades about 0.08 of its potential returns per unit of risk. LendingClub Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 946.00 in LendingClub Corp on August 29, 2024 and sell it today you would earn a total of 703.00 from holding LendingClub Corp or generate 74.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. LendingClub Corp
Performance |
| Timeline |
| Goldman Sachs Group |
| LendingClub Corp |
Goldman Sachs and LendingClub Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and LendingClub Corp
The main advantage of trading using opposite Goldman Sachs and LendingClub Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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.| Goldman Sachs vs. Morgan Stanley | Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup |
| LendingClub Corp vs. Visa Class A | LendingClub Corp vs. Mastercard | LendingClub Corp vs. Discover Financial Services |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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