Correlation Between Credit Suisse and American Century
Can any of the company-specific risk be diversified away by investing in both Credit Suisse and American Century 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 Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Suisse Managed and American Century One, you can compare the effects of market volatilities on Credit Suisse and American Century 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 Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Suisse and American Century.
Diversification Opportunities for Credit Suisse and American Century
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Credit and American is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Credit Suisse Managed and American Century One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century One 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 Managed are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century One has no effect on the direction of Credit Suisse i.e., Credit Suisse and American Century go up and down completely randomly.
Pair Corralation between Credit Suisse and American Century
Assuming the 90 days horizon Credit Suisse Managed is expected to generate 0.68 times more return on investment than American Century. However, Credit Suisse Managed is 1.47 times less risky than American Century. It trades about 0.28 of its potential returns per unit of risk. American Century One is currently generating about 0.08 per unit of risk. If you would invest 849.00 in Credit Suisse Managed on October 23, 2024 and sell it today you would earn a total of 22.00 from holding Credit Suisse Managed or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credit Suisse Managed vs. American Century One
Performance |
| Timeline |
| Credit Suisse Managed |
| American Century One |
Credit Suisse and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Suisse and American Century
The main advantage of trading using opposite Credit Suisse and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Suisse position performs unexpectedly, American Century 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 Century will offset losses from the drop in American Century's long position.The idea behind Credit Suisse Managed and American Century One 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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