Correlation Between FinVolution and Lendingtree

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

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

Diversification Opportunities for FinVolution and Lendingtree

-0.61

Correlation Coefficient

FinVolution  Lendingtree

Excellent diversification

The 3 months correlation between FinVolution and Lendingtree is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group and Lendingtree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendingtree and FinVolution 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 FinVolution Group are associated (or correlated) with Lendingtree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendingtree has no effect on the direction of FinVolution i.e., FinVolution and Lendingtree go up and down completely randomly.

Pair Corralation between FinVolution and Lendingtree

Given the investment horizon of 90 days FinVolution is expected to generate 1.95 times less return on investment than Lendingtree. But when comparing it to its historical volatility, FinVolution Group is 2.41 times less risky than Lendingtree. It trades about 0.04 of its potential returns per unit of risk. Lendingtree is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,101  in Lendingtree on October 5, 2024 and sell it today you would earn a total of  795.00  from holding Lendingtree or generate 25.64% return on investment over 90 days.

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

FinVolution Group  vs.  Lendingtree

FinVolution Group

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FinVolution Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, FinVolution is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Lendingtree

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with FinVolution and Lendingtree

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

The idea behind FinVolution Group and Lendingtree 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.