Correlation Between SPDR Gold and Credit Suisse

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

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

Diversification Opportunities for SPDR Gold and Credit Suisse

0.9

Correlation Coefficient

SPDR Gold  Credit Suisse

Almost no diversification

The 3 months correlation between SPDR and Credit is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and Credit Suisse X Links in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse X and SPDR Gold 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 SPDR Gold Shares 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 X has no effect on the direction of SPDR Gold i.e., SPDR Gold and Credit Suisse go up and down completely randomly.

Pair Corralation between SPDR Gold and Credit Suisse

Considering the 90-day investment horizon SPDR Gold Shares is expected to generate 0.71 times more return on investment than Credit Suisse. However, SPDR Gold Shares is 1.41 times less risky than Credit Suisse. It trades about 0.09 of its potential returns per unit of risk. Credit Suisse X Links is currently generating about 0.04 per unit of risk. If you would invest  16,867  in SPDR Gold Shares on September 14, 2024 and sell it today you would earn a total of  7,861  from holding SPDR Gold Shares or generate 46.61% return on investment over 90 days.

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

SPDR Gold Shares  vs.  Credit Suisse X Links

SPDR Gold Shares

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Gold Shares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, SPDR Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Credit Suisse X

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Suisse X Links are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Credit Suisse is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SPDR Gold and Credit Suisse

The main advantage of trading using opposite SPDR Gold and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold 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 SPDR Gold Shares and Credit Suisse X Links 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 Transaction History module to view history of all your transactions and understand their impact on performance.