Correlation Between LendingClub Corp and Navient Corp

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

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

Diversification Opportunities for LendingClub Corp and Navient Corp

0.14

Correlation Coefficient

LendingClub Corp  Navient Corp

Average diversification

The 3 months correlation between LendingClub and Navient is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and Navient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navient Corp 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 Navient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navient Corp has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and Navient Corp go up and down completely randomly.

Pair Corralation between LendingClub Corp and Navient Corp

Allowing for the 90-day total investment horizon LendingClub Corp is expected to under-perform the Navient Corp. In addition to that, LendingClub Corp is 2.07 times more volatile than Navient Corp. It trades about -0.18 of its total potential returns per unit of risk. Navient Corp is currently generating about 0.01 per unit of volatility. If you would invest  1,283  in Navient Corp on December 30, 2024 and sell it today you would lose (1.00) from holding Navient Corp or give up 0.08% of portfolio value over 90 days.

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

LendingClub Corp  vs.  Navient Corp

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.

Navient Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Navient Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Navient Corp is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with LendingClub Corp and Navient Corp

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

The idea behind LendingClub Corp and Navient 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.