Correlation Between American Beacon and Credit Suisse
Can any of the company-specific risk be diversified away by investing in both American Beacon 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 American Beacon and Credit Suisse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Large and Credit Suisse Modity, you can compare the effects of market volatilities on American Beacon 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 American Beacon with a short position of Credit Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Credit Suisse.
Diversification Opportunities for American Beacon and Credit Suisse
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Credit is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Large and Credit Suisse Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse Modity and American Beacon 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 American Beacon Large 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 Modity has no effect on the direction of American Beacon i.e., American Beacon and Credit Suisse go up and down completely randomly.
Pair Corralation between American Beacon and Credit Suisse
Assuming the 90 days horizon American Beacon Large is expected to generate 1.12 times more return on investment than Credit Suisse. However, American Beacon is 1.12 times more volatile than Credit Suisse Modity. It trades about 0.29 of its potential returns per unit of risk. Credit Suisse Modity is currently generating about 0.03 per unit of risk. If you would invest 2,608 in American Beacon Large on September 1, 2024 and sell it today you would earn a total of 133.00 from holding American Beacon Large or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Large vs. Credit Suisse Modity
Performance |
| Timeline |
| American Beacon Large |
| Credit Suisse Modity |
American Beacon and Credit Suisse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Credit Suisse
The main advantage of trading using opposite American Beacon and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon 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.| American Beacon vs. Northern Small Cap | American Beacon vs. Ssga International Stock | American Beacon vs. American Beacon International | American Beacon vs. Perkins Mid Cap |
| Credit Suisse vs. Credit Suisse Floating | Credit Suisse vs. Credit Suisse Floating | Credit Suisse vs. Credit Suisse Modity | Credit Suisse vs. Credit Suisse Modity |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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