Correlation Between Lexinfintech Holdings and LendingClub Corp
Can any of the company-specific risk be diversified away by investing in both Lexinfintech Holdings 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 Lexinfintech Holdings and LendingClub Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lexinfintech Holdings and LendingClub Corp, you can compare the effects of market volatilities on Lexinfintech Holdings 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 Lexinfintech Holdings with a short position of LendingClub Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexinfintech Holdings and LendingClub Corp.
Diversification Opportunities for Lexinfintech Holdings and LendingClub Corp
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lexinfintech and LendingClub is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lexinfintech Holdings and LendingClub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingClub Corp and Lexinfintech Holdings 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 Lexinfintech Holdings 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 Lexinfintech Holdings i.e., Lexinfintech Holdings and LendingClub Corp go up and down completely randomly.
Pair Corralation between Lexinfintech Holdings and LendingClub Corp
Allowing for the 90-day total investment horizon Lexinfintech Holdings is expected to generate 1.24 times more return on investment than LendingClub Corp. However, Lexinfintech Holdings is 1.24 times more volatile than LendingClub Corp. It trades about 0.0 of its potential returns per unit of risk. LendingClub Corp is currently generating about -0.02 per unit of risk. If you would invest 243.00 in Lexinfintech Holdings on January 19, 2024 and sell it today you would lose (83.00) from holding Lexinfintech Holdings or give up 34.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lexinfintech Holdings vs. LendingClub Corp
Performance |
| Timeline |
| Lexinfintech Holdings |
| LendingClub Corp |
Lexinfintech Holdings and LendingClub Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lexinfintech Holdings and LendingClub Corp
The main advantage of trading using opposite Lexinfintech Holdings and LendingClub Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexinfintech Holdings 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.| Lexinfintech Holdings vs. Mersana Therapeutics | Lexinfintech Holdings vs. Amtech Systems | Lexinfintech Holdings vs. First United |
| LendingClub Corp vs. Mersana Therapeutics | LendingClub Corp vs. Amtech Systems | LendingClub Corp vs. First United |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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