Correlation Between Virtu Financial and LendingClub Corp

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

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

Diversification Opportunities for Virtu Financial and LendingClub Corp

0.04

Correlation Coefficient

Virtu Financial  LendingClub Corp

Significant diversification

The 3 months correlation between Virtu and LendingClub is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Virtu Financial and LendingClub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingClub Corp and Virtu Financial 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 Virtu Financial are associated (or correlated) with LendingClub Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LendingClub Corp has no effect on the direction of Virtu Financial i.e., Virtu Financial and LendingClub Corp go up and down completely randomly.

Pair Corralation between Virtu Financial and LendingClub Corp

Given the investment horizon of 90 days Virtu Financial is expected to generate 0.59 times more return on investment than LendingClub Corp. However, Virtu Financial is 1.68 times less risky than LendingClub Corp. It trades about 0.05 of its potential returns per unit of risk. LendingClub Corp is currently generating about -0.18 per unit of risk. If you would invest  3,570  in Virtu Financial on December 29, 2024 and sell it today you would earn a total of  206.00  from holding Virtu Financial or generate 5.77% return on investment over 90 days.

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

Virtu Financial  vs.  LendingClub Corp

Virtu Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtu Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Virtu Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with Virtu Financial and LendingClub Corp

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

The idea behind Virtu Financial and LendingClub 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.