Correlation Between LendingClub Corp and American Express
Can any of the company-specific risk be diversified away by investing in both LendingClub Corp and American Express 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 American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LendingClub Corp and American Express, you can compare the effects of market volatilities on LendingClub Corp and American Express 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 American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of LendingClub Corp and American Express.
Diversification Opportunities for LendingClub Corp and American Express
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between LendingClub and American is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express 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 American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and American Express go up and down completely randomly.
Pair Corralation between LendingClub Corp and American Express
Allowing for the 90-day total investment horizon LendingClub Corp is expected to generate 7.36 times less return on investment than American Express. In addition to that, LendingClub Corp is 2.4 times more volatile than American Express. It trades about 0.01 of its total potential returns per unit of risk. American Express is currently generating about 0.13 per unit of volatility. If you would invest 14,865 in American Express on January 19, 2024 and sell it today you would earn a total of 6,885 from holding American Express or generate 46.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LendingClub Corp vs. American Express
Performance |
| Timeline |
| LendingClub Corp |
| American Express |
LendingClub Corp and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LendingClub Corp and American Express
The main advantage of trading using opposite LendingClub Corp and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LendingClub Corp position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.| LendingClub Corp vs. Mersana Therapeutics | LendingClub Corp vs. Amtech Systems | LendingClub Corp vs. First United |
| American Express vs. Mersana Therapeutics | American Express vs. Amtech Systems | American Express 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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