Correlation Between LendingClub Corp and ARMOUR Residential
Can any of the company-specific risk be diversified away by investing in both LendingClub Corp and ARMOUR Residential 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 LendingClub Corp and ARMOUR Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LendingClub Corp and ARMOUR Residential REIT, you can compare the effects of market volatilities on LendingClub Corp and ARMOUR Residential 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 LendingClub Corp with a short position of ARMOUR Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of LendingClub Corp and ARMOUR Residential.
Diversification Opportunities for LendingClub Corp and ARMOUR Residential
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LendingClub and ARMOUR is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and ARMOUR Residential REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARMOUR Residential REIT and LendingClub Corp 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 LendingClub Corp are associated (or correlated) with ARMOUR Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARMOUR Residential REIT has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and ARMOUR Residential go up and down completely randomly.
Pair Corralation between LendingClub Corp and ARMOUR Residential
Allowing for the 90-day total investment horizon LendingClub Corp is expected to generate 3.35 times more return on investment than ARMOUR Residential. However, LendingClub Corp is 3.35 times more volatile than ARMOUR Residential REIT. It trades about 0.23 of its potential returns per unit of risk. ARMOUR Residential REIT is currently generating about -0.01 per unit of risk. If you would invest 1,423 in LendingClub Corp on August 28, 2024 and sell it today you would earn a total of 235.00 from holding LendingClub Corp or generate 16.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LendingClub Corp vs. ARMOUR Residential REIT
Performance |
| Timeline |
| LendingClub Corp |
| ARMOUR Residential REIT |
LendingClub Corp and ARMOUR Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LendingClub Corp and ARMOUR Residential
The main advantage of trading using opposite LendingClub Corp and ARMOUR Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LendingClub Corp position performs unexpectedly, ARMOUR Residential 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 ARMOUR Residential will offset losses from the drop in ARMOUR Residential's long position.| LendingClub Corp vs. SLM Corp | LendingClub Corp vs. Orix Corp Ads | LendingClub Corp vs. FirstCash | LendingClub Corp vs. Medallion Financial Corp |
| ARMOUR Residential vs. Blackstone Mortgage Trust | ARMOUR Residential vs. Omega Healthcare Investors | ARMOUR Residential vs. Medical Properties Trust |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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