Correlation Between Credit Suisse and Franklin Moderate

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

By analyzing existing cross correlation between Credit Suisse Multialternative and Franklin Moderate Allocation, you can compare the effects of market volatilities on Credit Suisse and Franklin Moderate 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 Franklin Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Suisse and Franklin Moderate.

Diversification Opportunities for Credit Suisse and Franklin Moderate

0.47

Correlation Coefficient

Credit Suisse  Franklin Moderate

Very weak diversification

The 3 months correlation between Credit and Franklin is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Credit Suisse Multialternative and Franklin Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Moderate 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 Multialternative are associated (or correlated) with Franklin Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Moderate has no effect on the direction of Credit Suisse i.e., Credit Suisse and Franklin Moderate go up and down completely randomly.

Pair Corralation between Credit Suisse and Franklin Moderate

Assuming the 90 days horizon Credit Suisse Multialternative is expected to generate 0.59 times more return on investment than Franklin Moderate. However, Credit Suisse Multialternative is 1.7 times less risky than Franklin Moderate. It trades about 0.14 of its potential returns per unit of risk. Franklin Moderate Allocation is currently generating about 0.0 per unit of risk. If you would invest  812.00  in Credit Suisse Multialternative on December 21, 2024 and sell it today you would earn a total of  24.00  from holding Credit Suisse Multialternative or generate 2.96% return on investment over 90 days.

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

Credit Suisse Multialternative  vs.  Franklin Moderate Allocation

Credit Suisse Multia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Suisse Multialternative are ranked lower than 11 (%) 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.

Franklin Moderate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Moderate Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Franklin Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Credit Suisse and Franklin Moderate

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

The idea behind Credit Suisse Multialternative and Franklin Moderate Allocation 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.