Correlation Between Credit Suisse and United States

Can any of the company-specific risk be diversified away by investing in both Credit Suisse and United States 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 United States 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 United States 12, you can compare the effects of market volatilities on Credit Suisse and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Suisse and United States.

Diversification Opportunities for Credit Suisse and United States

0.98

Correlation Coefficient

Credit Suisse  United States

Almost no diversification

The 3 months correlation between Credit and United is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Credit Suisse X Links and United States 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States 12 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States 12 has no effect on the direction of Credit Suisse i.e., Credit Suisse and United States go up and down completely randomly.

Pair Corralation between Credit Suisse and United States

Given the investment horizon of 90 days Credit Suisse X Links is expected to under-perform the United States. But the etf apears to be less risky and, when comparing its historical volatility, Credit Suisse X Links is 1.05 times less risky than United States. The etf trades about -0.05 of its potential returns per unit of risk. The United States 12 is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,691  in United States 12 on December 20, 2024 and sell it today you would lose (57.00) from holding United States 12 or give up 1.54% of portfolio value over 90 days.

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

Credit Suisse X Links  vs.  United States 12

Credit Suisse X

Risk-Adjusted Performance

Very Weak

Over the last 90 days Credit Suisse X Links has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

United States 12

Risk-Adjusted Performance

Very Weak

Over the last 90 days United States 12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, United States is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Credit Suisse and United States

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

The idea behind Credit Suisse X Links and United States 12 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.