Correlation Between Credit Acceptance and LendingClub Corp
Can any of the company-specific risk be diversified away by investing in both Credit Acceptance 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 Credit Acceptance and LendingClub Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Acceptance and LendingClub Corp, you can compare the effects of market volatilities on Credit Acceptance 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 Credit Acceptance with a short position of LendingClub Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Acceptance and LendingClub Corp.
Diversification Opportunities for Credit Acceptance and LendingClub Corp
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Credit and LendingClub is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Credit Acceptance and LendingClub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingClub Corp and Credit Acceptance 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 Credit Acceptance 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 Credit Acceptance i.e., Credit Acceptance and LendingClub Corp go up and down completely randomly.
Pair Corralation between Credit Acceptance and LendingClub Corp
Given the investment horizon of 90 days Credit Acceptance is expected to generate 0.83 times more return on investment than LendingClub Corp. However, Credit Acceptance is 1.2 times less risky than LendingClub Corp. It trades about 0.01 of its potential returns per unit of risk. LendingClub Corp is currently generating about -0.03 per unit of risk. If you would invest 53,785 in Credit Acceptance on January 18, 2024 and sell it today you would earn a total of 2.00 from holding Credit Acceptance or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Credit Acceptance vs. LendingClub Corp
Performance |
Timeline |
Credit Acceptance |
LendingClub Corp |
Credit Acceptance and LendingClub Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Credit Acceptance and LendingClub Corp
The main advantage of trading using opposite Credit Acceptance and LendingClub Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Acceptance 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.Credit Acceptance vs. Visa Class A | Credit Acceptance vs. PayPal Holdings | Credit Acceptance vs. Mastercard |
LendingClub Corp vs. Visa Class A | LendingClub Corp vs. PayPal Holdings | LendingClub Corp vs. Mastercard |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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