Correlation Between Mastercard and LendingClub Corp
Can any of the company-specific risk be diversified away by investing in both Mastercard 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 Mastercard and LendingClub Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and LendingClub Corp, you can compare the effects of market volatilities on Mastercard 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 Mastercard with a short position of LendingClub Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and LendingClub Corp.
Diversification Opportunities for Mastercard and LendingClub Corp
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mastercard and LendingClub is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and LendingClub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingClub Corp and Mastercard 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 Mastercard 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 Mastercard i.e., Mastercard and LendingClub Corp go up and down completely randomly.
Pair Corralation between Mastercard and LendingClub Corp
Allowing for the 90-day total investment horizon Mastercard is expected to under-perform the LendingClub Corp. But the stock apears to be less risky and, when comparing its historical volatility, Mastercard is 2.75 times less risky than LendingClub Corp. The stock trades about -0.15 of its potential returns per unit of risk. The LendingClub Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 844.00 in LendingClub Corp on January 25, 2024 and sell it today you would lose (25.00) from holding LendingClub Corp or give up 2.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. LendingClub Corp
Performance |
| Timeline |
| Mastercard |
| LendingClub Corp |
Mastercard and LendingClub Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and LendingClub Corp
The main advantage of trading using opposite Mastercard and LendingClub Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard 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.| Mastercard vs. Senmiao Technology | Mastercard vs. X Financial Class | Mastercard vs. Yirendai | Mastercard vs. Qudian Inc |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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