Correlation Between Carlyle and LendingClub Corp

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

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

Diversification Opportunities for Carlyle and LendingClub Corp

0.76

Correlation Coefficient

Carlyle  LendingClub Corp

Poor diversification

The 3 months correlation between Carlyle and LendingClub is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and LendingClub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingClub Corp and Carlyle 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 Carlyle Group 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 Carlyle i.e., Carlyle and LendingClub Corp go up and down completely randomly.

Pair Corralation between Carlyle and LendingClub Corp

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 0.72 times more return on investment than LendingClub Corp. However, Carlyle Group is 1.39 times less risky than LendingClub Corp. It trades about -0.08 of its potential returns per unit of risk. LendingClub Corp is currently generating about -0.18 per unit of risk. If you would invest  5,018  in Carlyle Group on December 29, 2024 and sell it today you would lose (703.00) from holding Carlyle Group or give up 14.01% of portfolio value over 90 days.

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

Carlyle Group  vs.  LendingClub Corp

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

LendingClub Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days LendingClub Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Carlyle and LendingClub Corp

The main advantage of trading using opposite Carlyle and LendingClub Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle 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 Carlyle Group 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.