Correlation Between LendingClub Corp and Ready Capital
Can any of the company-specific risk be diversified away by investing in both LendingClub Corp and Ready Capital 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 Ready Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LendingClub Corp and Ready Capital, you can compare the effects of market volatilities on LendingClub Corp and Ready Capital 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 Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of LendingClub Corp and Ready Capital.
Diversification Opportunities for LendingClub Corp and Ready Capital
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LendingClub and Ready is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and Ready Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital 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 Ready Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ready Capital has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and Ready Capital go up and down completely randomly.
Pair Corralation between LendingClub Corp and Ready Capital
Allowing for the 90-day total investment horizon LendingClub Corp is expected to generate 6.12 times more return on investment than Ready Capital. However, LendingClub Corp is 6.12 times more volatile than Ready Capital. It trades about 0.05 of its potential returns per unit of risk. Ready Capital is currently generating about 0.04 per unit of risk. If you would invest 948.00 in LendingClub Corp on August 28, 2024 and sell it today you would earn a total of 710.00 from holding LendingClub Corp or generate 74.89% 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. Ready Capital
Performance |
| Timeline |
| LendingClub Corp |
| Ready Capital |
LendingClub Corp and Ready Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LendingClub Corp and Ready Capital
The main advantage of trading using opposite LendingClub Corp and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LendingClub Corp position performs unexpectedly, Ready Capital 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 Ready Capital will offset losses from the drop in Ready Capital's long position.| LendingClub Corp vs. SLM Corp | LendingClub Corp vs. Orix Corp Ads | LendingClub Corp vs. FirstCash | LendingClub Corp vs. Medallion Financial Corp |
| Ready Capital vs. QVCC | Ready Capital vs. Eagle Point Credit | Ready Capital vs. National Rural Utilities |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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