Correlation Between Columbia Select and Credit Suisse

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

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

Diversification Opportunities for Columbia Select and Credit Suisse

-0.19

Correlation Coefficient

Columbia Select  Credit Suisse

Good diversification

The 3 months correlation between Columbia and Credit is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Select Large and Credit Suisse Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse Modity and Columbia Select 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 Columbia Select Large are associated (or correlated) with Credit Suisse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Suisse Modity has no effect on the direction of Columbia Select i.e., Columbia Select and Credit Suisse go up and down completely randomly.

Pair Corralation between Columbia Select and Credit Suisse

Assuming the 90 days horizon Columbia Select is expected to generate 1.89 times less return on investment than Credit Suisse. In addition to that, Columbia Select is 2.09 times more volatile than Credit Suisse Modity. It trades about 0.03 of its total potential returns per unit of risk. Credit Suisse Modity is currently generating about 0.11 per unit of volatility. If you would invest  2,056  in Credit Suisse Modity on September 11, 2024 and sell it today you would earn a total of  113.00  from holding Credit Suisse Modity or generate 5.5% return on investment over 90 days.

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

Columbia Select Large  vs.  Credit Suisse Modity

Columbia Select Large

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Select Large are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Credit Suisse Modity

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Suisse Modity are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Credit Suisse is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Columbia Select and Credit Suisse

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

The idea behind Columbia Select Large and Credit Suisse Modity 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.