Correlation Between LendingClub Corp and Bayview Acquisition
Can any of the company-specific risk be diversified away by investing in both LendingClub Corp and Bayview Acquisition 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 Bayview Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LendingClub Corp and Bayview Acquisition Corp, you can compare the effects of market volatilities on LendingClub Corp and Bayview Acquisition 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 Bayview Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of LendingClub Corp and Bayview Acquisition.
Diversification Opportunities for LendingClub Corp and Bayview Acquisition
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LendingClub and Bayview is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and Bayview Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayview Acquisition Corp 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 Bayview Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayview Acquisition Corp has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and Bayview Acquisition go up and down completely randomly.
Pair Corralation between LendingClub Corp and Bayview Acquisition
Allowing for the 90-day total investment horizon LendingClub Corp is expected to generate 18.32 times more return on investment than Bayview Acquisition. However, LendingClub Corp is 18.32 times more volatile than Bayview Acquisition Corp. It trades about 0.05 of its potential returns per unit of risk. Bayview Acquisition Corp is currently generating about 0.14 per unit of risk. 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 | Strong |
| Accuracy | 46.37% |
| Values | Daily Returns |
LendingClub Corp vs. Bayview Acquisition Corp
Performance |
| Timeline |
| LendingClub Corp |
| Bayview Acquisition Corp |
LendingClub Corp and Bayview Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LendingClub Corp and Bayview Acquisition
The main advantage of trading using opposite LendingClub Corp and Bayview Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LendingClub Corp position performs unexpectedly, Bayview Acquisition 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 Bayview Acquisition will offset losses from the drop in Bayview Acquisition's long position.| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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