Correlation Between ProShares and Credit Suisse

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

By analyzing existing cross correlation between ProShares K 1 Free and Credit Suisse X Links, you can compare the effects of market volatilities on ProShares 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 ProShares with a short position of Credit Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Credit Suisse.

Diversification Opportunities for ProShares and Credit Suisse

0.64

Correlation Coefficient

ProShares  Credit Suisse

Poor diversification

The 3 months correlation between ProShares and Credit is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ProShares K 1 Free 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 ProShares 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 ProShares K 1 Free 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 ProShares i.e., ProShares and Credit Suisse go up and down completely randomly.

Pair Corralation between ProShares and Credit Suisse

Given the investment horizon of 90 days ProShares is expected to generate 1.61 times less return on investment than Credit Suisse. In addition to that, ProShares is 1.14 times more volatile than Credit Suisse X Links. It trades about 0.02 of its total potential returns per unit of risk. Credit Suisse X Links is currently generating about 0.04 per unit of volatility. If you would invest  5,411  in Credit Suisse X Links on October 9, 2024 and sell it today you would earn a total of  1,224  from holding Credit Suisse X Links or generate 22.62% return on investment over 90 days.

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

ProShares K 1 Free  vs.  Credit Suisse X Links

ProShares K 1

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares K 1 Free are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, ProShares is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Credit Suisse X

Risk-Adjusted Performance

5 of 100

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 ProShares and Credit Suisse

The main advantage of trading using opposite ProShares and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares 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 ProShares K 1 Free 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.