Correlation Between LendingClub Corp and Two Harbors

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

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

Diversification Opportunities for LendingClub Corp and Two Harbors

-0.87

Correlation Coefficient

LendingClub Corp  Two Harbors

Pay attention - limited upside

The 3 months correlation between LendingClub and Two is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and Two Harbors Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Two Harbors Investments 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 Two Harbors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Two Harbors Investments has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and Two Harbors go up and down completely randomly.

Pair Corralation between LendingClub Corp and Two Harbors

Allowing for the 90-day total investment horizon LendingClub Corp is expected to under-perform the Two Harbors. In addition to that, LendingClub Corp is 2.49 times more volatile than Two Harbors Investments. It trades about -0.18 of its total potential returns per unit of risk. Two Harbors Investments is currently generating about 0.19 per unit of volatility. If you would invest  1,117  in Two Harbors Investments on December 28, 2024 and sell it today you would earn a total of  204.00  from holding Two Harbors Investments or generate 18.26% return on investment over 90 days.

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

LendingClub Corp  vs.  Two Harbors Investments

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.

Two Harbors Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Two Harbors Investments are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Two Harbors displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LendingClub Corp and Two Harbors

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

The idea behind LendingClub Corp and Two Harbors Investments 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 Stocks Directory module to find actively traded stocks across global markets.