Correlation Between LendingClub Corp and PIMCO 1

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Can any of the company-specific risk be diversified away by investing in both LendingClub Corp and PIMCO 1 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 PIMCO 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LendingClub Corp and PIMCO 1 5 Year, you can compare the effects of market volatilities on LendingClub Corp and PIMCO 1 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 PIMCO 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of LendingClub Corp and PIMCO 1.

Diversification Opportunities for LendingClub Corp and PIMCO 1

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between LendingClub and PIMCO is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and PIMCO 1-5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO 1-5 Year 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 PIMCO 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO 1-5 Year has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and PIMCO 1 go up and down completely randomly.

Pair Corralation between LendingClub Corp and PIMCO 1

Allowing for the 90-day total investment horizon LendingClub Corp is expected to generate 18.87 times more return on investment than PIMCO 1. However, LendingClub Corp is 18.87 times more volatile than PIMCO 1 5 Year. It trades about 0.1 of its potential returns per unit of risk. PIMCO 1 5 Year is currently generating about 0.34 per unit of risk. If you would invest  830.00  in LendingClub Corp on December 29, 2023 and sell it today you would earn a total of  38.00  from holding LendingClub Corp or generate 4.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

LendingClub Corp  vs.  PIMCO 1-5 Year

 Performance 
       Timeline  
LendingClub Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days LendingClub Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, LendingClub Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
PIMCO 1-5 Year 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO 1 5 Year are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, PIMCO 1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

LendingClub Corp and PIMCO 1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LendingClub Corp and PIMCO 1

The main advantage of trading using opposite LendingClub Corp and PIMCO 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LendingClub Corp position performs unexpectedly, PIMCO 1 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 PIMCO 1 will offset losses from the drop in PIMCO 1's long position.
The idea behind LendingClub Corp and PIMCO 1 5 Year pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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