Correlation Between Credit Suisse and Rydex Inverse

Can any of the company-specific risk be diversified away by investing in both Credit Suisse and Rydex Inverse 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 Rydex Inverse 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 Rydex Inverse Nasdaq 100, you can compare the effects of market volatilities on Credit Suisse and Rydex Inverse 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 Rydex Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Suisse and Rydex Inverse.

Diversification Opportunities for Credit Suisse and Rydex Inverse

0.49

Correlation Coefficient

Credit Suisse  Rydex Inverse

Very weak diversification

The 3 months correlation between Credit and Rydex is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Credit Suisse Multialternative and Rydex Inverse Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rydex Inverse Nasdaq 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 Rydex Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rydex Inverse Nasdaq has no effect on the direction of Credit Suisse i.e., Credit Suisse and Rydex Inverse go up and down completely randomly.

Pair Corralation between Credit Suisse and Rydex Inverse

Assuming the 90 days horizon Credit Suisse Multialternative is expected to under-perform the Rydex Inverse. But the mutual fund apears to be less risky and, when comparing its historical volatility, Credit Suisse Multialternative is 1.01 times less risky than Rydex Inverse. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Rydex Inverse Nasdaq 100 is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,102  in Rydex Inverse Nasdaq 100 on October 9, 2024 and sell it today you would lose (71.00) from holding Rydex Inverse Nasdaq 100 or give up 6.44% of portfolio value over 90 days.

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

Credit Suisse Multialternative  vs.  Rydex Inverse Nasdaq 100

Credit Suisse Multia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credit Suisse Multialternative has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Rydex Inverse Nasdaq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rydex Inverse Nasdaq 100 has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Credit Suisse and Rydex Inverse

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

The idea behind Credit Suisse Multialternative and Rydex Inverse Nasdaq 100 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.