Correlation Between LendingClub Corp and LM Funding
Can any of the company-specific risk be diversified away by investing in both LendingClub Corp and LM Funding 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 LM Funding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LendingClub Corp and LM Funding America, you can compare the effects of market volatilities on LendingClub Corp and LM Funding 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 LM Funding. Check out your portfolio center. Please also check ongoing floating volatility patterns of LendingClub Corp and LM Funding.
Diversification Opportunities for LendingClub Corp and LM Funding
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LendingClub and LMFA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and LM Funding America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LM Funding America 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 LM Funding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LM Funding America has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and LM Funding go up and down completely randomly.
Pair Corralation between LendingClub Corp and LM Funding
Allowing for the 90-day total investment horizon LendingClub Corp is expected to generate 0.45 times more return on investment than LM Funding. However, LendingClub Corp is 2.22 times less risky than LM Funding. It trades about 0.06 of its potential returns per unit of risk. LM Funding America is currently generating about 0.02 per unit of risk. If you would invest 934.00 in LendingClub Corp on August 31, 2024 and sell it today you would earn a total of 730.00 from holding LendingClub Corp or generate 78.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LendingClub Corp vs. LM Funding America
Performance |
| Timeline |
| LendingClub Corp |
| LM Funding America |
LendingClub Corp and LM Funding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LendingClub Corp and LM Funding
The main advantage of trading using opposite LendingClub Corp and LM Funding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LendingClub Corp position performs unexpectedly, LM Funding 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 LM Funding will offset losses from the drop in LM Funding's long position.| LendingClub Corp vs. Navient Corp | LendingClub Corp vs. Green Dot | LendingClub Corp vs. Orix Corp Ads | LendingClub Corp vs. FirstCash |
| LM Funding vs. X Financial Class | LM Funding vs. Nisun International Enterprise | LM Funding vs. Sentage Holdings | LM Funding vs. Cosmos Group Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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