Correlation Between LendingClub Corp and Mr Cooper

Can any of the company-specific risk be diversified away by investing in both LendingClub Corp and Mr Cooper 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 Mr Cooper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LendingClub Corp and Mr Cooper Group, you can compare the effects of market volatilities on LendingClub Corp and Mr Cooper 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 Mr Cooper. Check out your portfolio center. Please also check ongoing floating volatility patterns of LendingClub Corp and Mr Cooper.

Diversification Opportunities for LendingClub Corp and Mr Cooper

0.65

Correlation Coefficient

LendingClub Corp  Mr Cooper

Poor diversification

The 3 months correlation between LendingClub and COOP is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and Mr Cooper Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mr Cooper Group 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 Mr Cooper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mr Cooper Group has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and Mr Cooper go up and down completely randomly.

Pair Corralation between LendingClub Corp and Mr Cooper

Allowing for the 90-day total investment horizon LendingClub Corp is expected to generate 1.99 times more return on investment than Mr Cooper. However, LendingClub Corp is 1.99 times more volatile than Mr Cooper Group. It trades about 0.23 of its potential returns per unit of risk. Mr Cooper Group is currently generating about 0.05 per unit of risk. If you would invest  1,080  in LendingClub Corp on September 26, 2024 and sell it today you would earn a total of  586.00  from holding LendingClub Corp or generate 54.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

LendingClub Corp  vs.  Mr Cooper Group

LendingClub Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LendingClub Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, LendingClub Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Mr Cooper Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mr Cooper Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Mr Cooper is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with LendingClub Corp and Mr Cooper

The main advantage of trading using opposite LendingClub Corp and Mr Cooper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LendingClub Corp position performs unexpectedly, Mr Cooper 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 Mr Cooper will offset losses from the drop in Mr Cooper's long position.

The idea behind LendingClub Corp and Mr Cooper Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.