Correlation Between Credit Suisse and Commodity Return

Can any of the company-specific risk be diversified away by investing in both Credit Suisse and Commodity Return 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 Credit Suisse and Commodity Return into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Credit Suisse Strategic and Commodity Return Strategy, you can compare the effects of market volatilities on Credit Suisse and Commodity Return 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 Credit Suisse with a short position of Commodity Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Suisse and Commodity Return.

Diversification Opportunities for Credit Suisse and Commodity Return

0.82

Correlation Coefficient

Credit Suisse  Commodity Return

Very poor diversification

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

Pair Corralation between Credit Suisse and Commodity Return

Assuming the 90 days horizon Credit Suisse is expected to generate 9.49 times less return on investment than Commodity Return. But when comparing it to its historical volatility, Credit Suisse Strategic is 5.03 times less risky than Commodity Return. It trades about 0.08 of its potential returns per unit of risk. Commodity Return Strategy is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,764  in Commodity Return Strategy on December 2, 2024 and sell it today you would earn a total of  126.00  from holding Commodity Return Strategy or generate 7.14% return on investment over 90 days.

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

Credit Suisse Strategic  vs.  Commodity Return Strategy

Credit Suisse Strategic

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Suisse Strategic are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Credit Suisse is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Commodity Return Strategy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Commodity Return Strategy are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Commodity Return may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Credit Suisse and Commodity Return

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

The idea behind Credit Suisse Strategic and Commodity Return Strategy 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.