Correlation Between Green Dot and LendingClub Corp
Can any of the company-specific risk be diversified away by investing in both Green Dot 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 Green Dot and LendingClub Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Dot and LendingClub Corp, you can compare the effects of market volatilities on Green Dot 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 Green Dot with a short position of LendingClub Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Dot and LendingClub Corp.
Diversification Opportunities for Green Dot and LendingClub Corp
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Green and LendingClub is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Green Dot and LendingClub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingClub Corp and Green Dot 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 Green Dot 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 Green Dot i.e., Green Dot and LendingClub Corp go up and down completely randomly.
Pair Corralation between Green Dot and LendingClub Corp
Given the investment horizon of 90 days Green Dot is expected to under-perform the LendingClub Corp. But the stock apears to be less risky and, when comparing its historical volatility, Green Dot is 1.11 times less risky than LendingClub Corp. The stock trades about -0.05 of its potential returns per unit of risk. The LendingClub Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,353 in LendingClub Corp on February 4, 2024 and sell it today you would lose (425.00) from holding LendingClub Corp or give up 31.41% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Green Dot vs. LendingClub Corp
Performance |
Timeline |
Green Dot |
LendingClub Corp |
Green Dot and LendingClub Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Green Dot and LendingClub Corp
The main advantage of trading using opposite Green Dot and LendingClub Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Dot 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.The idea behind Green Dot and LendingClub Corp 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.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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