Correlation Between LendingClub Corp and Synchrony Financial

Can any of the company-specific risk be diversified away by investing in both LendingClub Corp and Synchrony 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 Synchrony 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 Synchrony Financial, you can compare the effects of market volatilities on LendingClub Corp and Synchrony 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 Synchrony Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LendingClub Corp and Synchrony Financial.

Diversification Opportunities for LendingClub Corp and Synchrony Financial

0.85

Correlation Coefficient

LendingClub Corp  Synchrony Financial

Very poor diversification

The 3 months correlation between LendingClub and Synchrony is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub Corp and Synchrony Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchrony 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 Synchrony Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synchrony Financial has no effect on the direction of LendingClub Corp i.e., LendingClub Corp and Synchrony Financial go up and down completely randomly.

Pair Corralation between LendingClub Corp and Synchrony Financial

Allowing for the 90-day total investment horizon LendingClub Corp is expected to generate 7.07 times more return on investment than Synchrony Financial. However, LendingClub Corp is 7.07 times more volatile than Synchrony Financial. It trades about 0.21 of its potential returns per unit of risk. Synchrony Financial is currently generating about 0.16 per unit of risk. If you would invest  1,030  in LendingClub Corp on May 4, 2025 and sell it today you would earn a total of  529.00  from holding LendingClub Corp or generate 51.36% return on investment over 90 days.

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

LendingClub Corp  vs.  Synchrony Financial

LendingClub Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LendingClub Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, LendingClub Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Synchrony Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synchrony Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Synchrony Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LendingClub Corp and Synchrony Financial

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

The idea behind LendingClub Corp and Synchrony 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.