Correlation Between Mid-cap Value and Credit Suisse

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

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

Diversification Opportunities for Mid-cap Value and Credit Suisse

-0.43

Correlation Coefficient

Mid-cap Value  Credit Suisse

Very good diversification

The 3 months correlation between Mid-cap and Credit is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value Profund 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 Mid-cap Value 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 Mid Cap Value Profund 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 Mid-cap Value i.e., Mid-cap Value and Credit Suisse go up and down completely randomly.

Pair Corralation between Mid-cap Value and Credit Suisse

Assuming the 90 days horizon Mid Cap Value Profund is expected to generate 1.76 times more return on investment than Credit Suisse. However, Mid-cap Value is 1.76 times more volatile than Credit Suisse Modity. It trades about 0.0 of its potential returns per unit of risk. Credit Suisse Modity is currently generating about -0.02 per unit of risk. If you would invest  8,924  in Mid Cap Value Profund on October 6, 2024 and sell it today you would lose (10.00) from holding Mid Cap Value Profund or give up 0.11% of portfolio value over 90 days.

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

Mid Cap Value Profund  vs.  Credit Suisse Modity

Mid Cap Value

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Value Profund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mid-cap Value 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

0 of 100

Very Weak

Over the last 90 days Credit Suisse Modity has generated negative risk-adjusted returns adding no value to fund investors. 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 Mid-cap Value and Credit Suisse

The main advantage of trading using opposite Mid-cap Value and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-cap Value 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 Mid Cap Value Profund 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.