Correlation Between LM Funding and Yirendai
Can any of the company-specific risk be diversified away by investing in both LM Funding and Yirendai 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 LM Funding and Yirendai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LM Funding America and Yirendai, you can compare the effects of market volatilities on LM Funding and Yirendai 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 LM Funding with a short position of Yirendai. Check out your portfolio center. Please also check ongoing floating volatility patterns of LM Funding and Yirendai.
Diversification Opportunities for LM Funding and Yirendai
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LMFA and Yirendai is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding LM Funding America and Yirendai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yirendai and LM Funding 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 LM Funding America are associated (or correlated) with Yirendai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yirendai has no effect on the direction of LM Funding i.e., LM Funding and Yirendai go up and down completely randomly.
Pair Corralation between LM Funding and Yirendai
Given the investment horizon of 90 days LM Funding America is expected to under-perform the Yirendai. In addition to that, LM Funding is 1.7 times more volatile than Yirendai. It trades about -0.07 of its total potential returns per unit of risk. Yirendai is currently generating about 0.33 per unit of volatility. If you would invest 480.00 in Yirendai on November 1, 2024 and sell it today you would earn a total of 101.00 from holding Yirendai or generate 21.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LM Funding America vs. Yirendai
Performance |
| Timeline |
| LM Funding America |
| Yirendai |
LM Funding and Yirendai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LM Funding and Yirendai
The main advantage of trading using opposite LM Funding and Yirendai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LM Funding position performs unexpectedly, Yirendai 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 Yirendai will offset losses from the drop in Yirendai's long position.| LM Funding vs. X Financial Class | LM Funding vs. Nisun International Enterprise | LM Funding vs. Sentage Holdings | LM Funding vs. Cosmos Group Holdings |
| Yirendai vs. Lexinfintech Holdings | Yirendai vs. FinVolution Group | Yirendai vs. 360 Finance | Yirendai vs. Navient Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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