Correlation Between LendingClub Corp and Sezzle Common

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

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

Diversification Opportunities for LendingClub Corp and Sezzle Common

0.89

Correlation Coefficient

LendingClub Corp  Sezzle Common

Very poor diversification

The 3 months correlation between LendingClub and Sezzle is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and Sezzle Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sezzle Common Stock 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 Sezzle Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sezzle Common Stock has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and Sezzle Common go up and down completely randomly.

Pair Corralation between LendingClub Corp and Sezzle Common

Allowing for the 90-day total investment horizon LendingClub Corp is expected to generate 4.17 times less return on investment than Sezzle Common. But when comparing it to its historical volatility, LendingClub Corp is 3.41 times less risky than Sezzle Common. It trades about 0.17 of its potential returns per unit of risk. Sezzle Common Stock is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  13,623  in Sezzle Common Stock on August 30, 2024 and sell it today you would earn a total of  27,872  from holding Sezzle Common Stock or generate 204.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

LendingClub Corp  vs.  Sezzle Common Stock

LendingClub Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LendingClub Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, LendingClub Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sezzle Common Stock

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sezzle Common Stock are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Sezzle Common disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LendingClub Corp and Sezzle Common

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

The idea behind LendingClub Corp and Sezzle Common Stock 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.