Correlation Between Morgan Stanley and Credit Suisse

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

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

Diversification Opportunities for Morgan Stanley and Credit Suisse

0.0

Correlation Coefficient

Morgan Stanley  Credit Suisse

Pay attention - limited upside

The 3 months correlation between Morgan and Credit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Credit Suisse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse and Morgan Stanley 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 Morgan Stanley Direct 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 has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Credit Suisse go up and down completely randomly.

Pair Corralation between Morgan Stanley and Credit Suisse

If you would invest (100.00) in Credit Suisse on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Credit Suisse or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Morgan Stanley Direct  vs.  Credit Suisse

Morgan Stanley Direct

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley Direct has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Credit Suisse

Risk-Adjusted Performance

Very Weak

Over the last 90 days Credit Suisse has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Credit Suisse is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Morgan Stanley and Credit Suisse

The main advantage of trading using opposite Morgan Stanley and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley 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 Morgan Stanley Direct and Credit Suisse 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.