Correlation Between Credit Suisse and American Beacon
Can any of the company-specific risk be diversified away by investing in both Credit Suisse and American Beacon 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 American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Suisse Modity and American Beacon Large, you can compare the effects of market volatilities on Credit Suisse and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Suisse and American Beacon.
Diversification Opportunities for Credit Suisse and American Beacon
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Credit and American is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Credit Suisse Modity and American Beacon Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Large 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 Modity are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Large has no effect on the direction of Credit Suisse i.e., Credit Suisse and American Beacon go up and down completely randomly.
Pair Corralation between Credit Suisse and American Beacon
Assuming the 90 days horizon Credit Suisse is expected to generate 11.13 times less return on investment than American Beacon. But when comparing it to its historical volatility, Credit Suisse Modity is 1.12 times less risky than American Beacon. It trades about 0.03 of its potential returns per unit of risk. American Beacon Large is currently generating about 0.29 of returns per unit of risk over similar time horizon. 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 |
Credit Suisse Modity vs. American Beacon Large
Performance |
| Timeline |
| Credit Suisse Modity |
| American Beacon Large |
Credit Suisse and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Suisse and American Beacon
The main advantage of trading using opposite Credit Suisse and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Suisse position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Credit Suisse vs. Credit Suisse Floating | Credit Suisse vs. Credit Suisse Floating | Credit Suisse vs. Credit Suisse Modity | Credit Suisse vs. Credit Suisse Modity |
| American Beacon vs. Northern Small Cap | American Beacon vs. Ssga International Stock | American Beacon vs. American Beacon International | American Beacon vs. Perkins Mid Cap |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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