Correlation Between LendingClub Corp and Voya Financial

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

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

Diversification Opportunities for LendingClub Corp and Voya Financial

-0.82

Correlation Coefficient

LendingClub Corp  Voya Financial

Pay attention - limited upside

The 3 months correlation between LendingClub and Voya is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and Voya Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Financial 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 Voya Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Financial has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and Voya Financial go up and down completely randomly.

Pair Corralation between LendingClub Corp and Voya Financial

Allowing for the 90-day total investment horizon LendingClub Corp is expected to under-perform the Voya Financial. In addition to that, LendingClub Corp is 4.14 times more volatile than Voya Financial. It trades about -0.15 of its total potential returns per unit of risk. Voya Financial is currently generating about 0.11 per unit of volatility. If you would invest  2,268  in Voya Financial on December 27, 2024 and sell it today you would earn a total of  131.00  from holding Voya Financial or generate 5.78% 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.  Voya Financial

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.

Voya Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Voya Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LendingClub Corp and Voya Financial

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

The idea behind LendingClub Corp and Voya Financial 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.