Correlation Between LendingClub Corp and Upstart Holdings

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

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

Diversification Opportunities for LendingClub Corp and Upstart Holdings

0.46

Correlation Coefficient

LendingClub Corp  Upstart Holdings

Very weak diversification

The 3 months correlation between LendingClub and Upstart is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and Upstart Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upstart Holdings 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 Upstart Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upstart Holdings has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and Upstart Holdings go up and down completely randomly.

Pair Corralation between LendingClub Corp and Upstart Holdings

Allowing for the 90-day total investment horizon LendingClub Corp is expected to under-perform the Upstart Holdings. But the stock apears to be less risky and, when comparing its historical volatility, LendingClub Corp is 1.63 times less risky than Upstart Holdings. The stock trades about -0.18 of its potential returns per unit of risk. The Upstart Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  6,332  in Upstart Holdings on December 29, 2024 and sell it today you would lose (1,422) from holding Upstart Holdings or give up 22.46% of portfolio value over 90 days.

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

LendingClub Corp  vs.  Upstart Holdings

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.

Upstart Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Upstart Holdings 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with LendingClub Corp and Upstart Holdings

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

The idea behind LendingClub Corp and Upstart Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.