In most turbocharger compressors, diffusers are designed with contractions along the passage mainly for delaying surge. The width ratio parameter, B, which defines the diffuser inlet width to diameter ratio significantly affects the losses in the diffuser. Changes to tip clearance, for example, due to the impeller rubbing the shroud casing changes the fluid flow angle at the impeller exit. The sensitivity of the absolute flow angle to the width ratio parameter has a significant influence on diffuser effectiveness and stage performance. This paper reports an investigation of tip clearance sensitivity to vaneless diffuser and stage performance of a turbocharger compressor. To assess the correlation between performance parameters and the tip clearance, Design of Experiments (DoE) was used to sample 40 design cases by changing the clearance at the leading (LE) and trailing edges (TE) of the impeller. Parameters correlation was subsequently used to determine their relationship. The key findings were that stage efficiency and pressure ratio increased linearly with decreasing LE and TE clearances having a maximum sensitivity value R = 0.7. Diffuser Cp showed a strong positive correlation for TE and a weak negative correlation for LE. Similarly, work input and diffuser loss coefficient showed an inverse relation to diffuser Cp with a maximum R value of 0.9.It was concluded that increasing the tip clearance at TE improves the diffuser effectiveness. The main source of low diffuser Cp for small tip clearances was due to higher diffusion losses as a result of flow nonuniformity when the width ratio and absolute flow angle were large. As the width ratio decreases along the passage appreciable frictional losses occur in larger tip clearance further increasing the losses. The absolute flow angle and width ratio were observed to be key to diffuser and stage performance.