Correlation Between LendingClub Corp and RF Acquisition
Can any of the company-specific risk be diversified away by investing in both LendingClub Corp and RF 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 RF 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 RF Acquisition Corp, you can compare the effects of market volatilities on LendingClub Corp and RF 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 RF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of LendingClub Corp and RF Acquisition.
Diversification Opportunities for LendingClub Corp and RF Acquisition
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LendingClub and RFACR is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and RF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF 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 RF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Acquisition Corp has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and RF Acquisition go up and down completely randomly.
Pair Corralation between LendingClub Corp and RF Acquisition
Allowing for the 90-day total investment horizon LendingClub Corp is expected to generate 3.25 times less return on investment than RF Acquisition. But when comparing it to its historical volatility, LendingClub Corp is 8.8 times less risky than RF Acquisition. It trades about 0.25 of its potential returns per unit of risk. RF Acquisition Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9.00 in RF Acquisition Corp on September 2, 2024 and sell it today you would lose (0.10) from holding RF Acquisition Corp or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 23.81% |
| Values | Daily Returns |
LendingClub Corp vs. RF Acquisition Corp
Performance |
| Timeline |
| LendingClub Corp |
| RF Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
LendingClub Corp and RF Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LendingClub Corp and RF Acquisition
The main advantage of trading using opposite LendingClub Corp and RF Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LendingClub Corp position performs unexpectedly, RF 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 RF Acquisition will offset losses from the drop in RF Acquisition's long position.| LendingClub Corp vs. Navient Corp | LendingClub Corp vs. Green Dot | LendingClub Corp vs. Orix Corp Ads | LendingClub Corp vs. FirstCash |
| RF Acquisition vs. Visa Class A | RF Acquisition vs. Diamond Hill Investment | RF Acquisition vs. Distoken Acquisition | RF Acquisition vs. AllianceBernstein Holding LP |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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