Correlation Between ETRACS Monthly and Credit Suisse

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

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

Diversification Opportunities for ETRACS Monthly and Credit Suisse

-0.22

Correlation Coefficient

ETRACS Monthly  Credit Suisse

Very good diversification

The 3 months correlation between ETRACS and Credit is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay 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 ETRACS Monthly 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 ETRACS Monthly Pay 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 ETRACS Monthly i.e., ETRACS Monthly and Credit Suisse go up and down completely randomly.

Pair Corralation between ETRACS Monthly and Credit Suisse

Given the investment horizon of 90 days ETRACS Monthly Pay is expected to generate 1.63 times more return on investment than Credit Suisse. However, ETRACS Monthly is 1.63 times more volatile than Credit Suisse X Links. It trades about 0.08 of its potential returns per unit of risk. Credit Suisse X Links is currently generating about 0.07 per unit of risk. If you would invest  1,639  in ETRACS Monthly Pay on December 2, 2024 and sell it today you would earn a total of  121.00  from holding ETRACS Monthly Pay or generate 7.38% return on investment over 90 days.

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

ETRACS Monthly Pay  vs.  Credit Suisse X Links

ETRACS Monthly Pay

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ETRACS Monthly Pay are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, ETRACS Monthly may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Credit Suisse X

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Suisse X Links are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Credit Suisse is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ETRACS Monthly and Credit Suisse

The main advantage of trading using opposite ETRACS Monthly and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS Monthly 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 ETRACS Monthly Pay 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.