Correlation Between Yirendai and LendingClub Corp
Can any of the company-specific risk be diversified away by investing in both Yirendai and LendingClub Corp 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 Yirendai and LendingClub Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yirendai and LendingClub Corp, you can compare the effects of market volatilities on Yirendai and LendingClub Corp 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 Yirendai with a short position of LendingClub Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yirendai and LendingClub Corp.
Diversification Opportunities for Yirendai and LendingClub Corp
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Yirendai and LendingClub is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Yirendai and LendingClub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingClub Corp and Yirendai 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 Yirendai are associated (or correlated) with LendingClub Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LendingClub Corp has no effect on the direction of Yirendai i.e., Yirendai and LendingClub Corp go up and down completely randomly.
Pair Corralation between Yirendai and LendingClub Corp
Considering the 90-day investment horizon Yirendai is expected to under-perform the LendingClub Corp. In addition to that, Yirendai is 1.94 times more volatile than LendingClub Corp. It trades about -0.07 of its total potential returns per unit of risk. LendingClub Corp is currently generating about 0.25 per unit of volatility. If you would invest 1,421 in LendingClub Corp on September 2, 2024 and sell it today you would earn a total of 243.00 from holding LendingClub Corp or generate 17.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yirendai vs. LendingClub Corp
Performance |
| Timeline |
| Yirendai |
| LendingClub Corp |
Yirendai and LendingClub Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yirendai and LendingClub Corp
The main advantage of trading using opposite Yirendai and LendingClub Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yirendai position performs unexpectedly, LendingClub Corp 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 LendingClub Corp will offset losses from the drop in LendingClub Corp's long position.| Yirendai vs. Lexinfintech Holdings | Yirendai vs. FinVolution Group | Yirendai vs. 360 Finance | Yirendai vs. Navient Corp |
| LendingClub Corp vs. Navient Corp | LendingClub Corp vs. Green Dot | LendingClub Corp vs. Orix Corp Ads | LendingClub Corp vs. FirstCash |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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