Correlation Between Credit Suisse and Western Asset

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

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

Diversification Opportunities for Credit Suisse and Western Asset

0.52

Correlation Coefficient

Credit Suisse  Western Asset

Very weak diversification

The 3 months correlation between Credit and Western is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Credit Suisse High and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High 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 High are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset High has no effect on the direction of Credit Suisse i.e., Credit Suisse and Western Asset go up and down completely randomly.

Pair Corralation between Credit Suisse and Western Asset

Considering the 90-day investment horizon Credit Suisse High is expected to generate 0.95 times more return on investment than Western Asset. However, Credit Suisse High is 1.05 times less risky than Western Asset. It trades about 0.08 of its potential returns per unit of risk. Western Asset High is currently generating about 0.01 per unit of risk. If you would invest  156.00  in Credit Suisse High on October 7, 2024 and sell it today you would earn a total of  62.00  from holding Credit Suisse High or generate 39.74% return on investment over 90 days.

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

Credit Suisse High  vs.  Western Asset High

Credit Suisse High

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Suisse High are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Credit Suisse is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Asset High

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Credit Suisse and Western Asset

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

The idea behind Credit Suisse High and Western Asset High 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.