Correlation Between Credit Suisse and ETRACS 2xMonthly

Can any of the company-specific risk be diversified away by investing in both Credit Suisse and ETRACS 2xMonthly 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 Credit Suisse and ETRACS 2xMonthly into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Credit Suisse X Links and ETRACS 2xMonthly Pay, you can compare the effects of market volatilities on Credit Suisse and ETRACS 2xMonthly 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 Credit Suisse with a short position of ETRACS 2xMonthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Suisse and ETRACS 2xMonthly.

Diversification Opportunities for Credit Suisse and ETRACS 2xMonthly

0.06

Correlation Coefficient

Credit Suisse  ETRACS 2xMonthly

Significant diversification

The 3 months correlation between Credit and ETRACS is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Credit Suisse X Links and ETRACS 2xMonthly Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS 2xMonthly Pay and Credit Suisse 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 Credit Suisse X Links are associated (or correlated) with ETRACS 2xMonthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS 2xMonthly Pay has no effect on the direction of Credit Suisse i.e., Credit Suisse and ETRACS 2xMonthly go up and down completely randomly.

Pair Corralation between Credit Suisse and ETRACS 2xMonthly

Given the investment horizon of 90 days Credit Suisse X Links is expected to generate 1.14 times more return on investment than ETRACS 2xMonthly. However, Credit Suisse is 1.14 times more volatile than ETRACS 2xMonthly Pay. It trades about 0.04 of its potential returns per unit of risk. ETRACS 2xMonthly Pay is currently generating about -0.03 per unit of risk. If you would invest  6,235  in Credit Suisse X Links on September 12, 2024 and sell it today you would earn a total of  155.00  from holding Credit Suisse X Links or generate 2.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Credit Suisse X Links  vs.  ETRACS 2xMonthly Pay

Credit Suisse X

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Suisse X Links are ranked lower than 2 (%) 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.

ETRACS 2xMonthly Pay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETRACS 2xMonthly Pay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, ETRACS 2xMonthly is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Credit Suisse and ETRACS 2xMonthly

The main advantage of trading using opposite Credit Suisse and ETRACS 2xMonthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Suisse position performs unexpectedly, ETRACS 2xMonthly 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 ETRACS 2xMonthly will offset losses from the drop in ETRACS 2xMonthly's long position.

The idea behind Credit Suisse X Links and ETRACS 2xMonthly Pay 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 Commodity Directory module to find actively traded commodities issued by global exchanges.