Correlation Between Visa and Credit Suisse

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

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

Diversification Opportunities for Visa and Credit Suisse

0.94

Correlation Coefficient

Visa  Credit Suisse

Almost no diversification

The 3 months correlation between Visa and Credit is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Credit Suisse Multialternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse Multia and Visa 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 Visa Class A 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 Multia has no effect on the direction of Visa i.e., Visa and Credit Suisse go up and down completely randomly.

Pair Corralation between Visa and Credit Suisse

Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.63 times more return on investment than Credit Suisse. However, Visa is 2.63 times more volatile than Credit Suisse Multialternative. It trades about 0.25 of its potential returns per unit of risk. Credit Suisse Multialternative is currently generating about 0.11 per unit of risk. If you would invest  31,612  in Visa Class A on December 2, 2024 and sell it today you would earn a total of  4,659  from holding Visa Class A or generate 14.74% return on investment over 90 days.

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

Visa Class A  vs.  Credit Suisse Multialternative

Visa Class A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Credit Suisse Multia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Suisse Multialternative are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Credit Suisse is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Credit Suisse

The main advantage of trading using opposite Visa and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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 Visa Class A and Credit Suisse Multialternative 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.