Correlation Between Credit Suisse and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both Credit Suisse and Morgan Stanley 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 Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Suisse High and Morgan Stanley Emerging, you can compare the effects of market volatilities on Credit Suisse and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Suisse and Morgan Stanley.
Diversification Opportunities for Credit Suisse and Morgan Stanley
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Credit and Morgan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Credit Suisse High and Morgan Stanley Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Emerging 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 High are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Emerging has no effect on the direction of Credit Suisse i.e., Credit Suisse and Morgan Stanley go up and down completely randomly.
Pair Corralation between Credit Suisse and Morgan Stanley
Considering the 90-day investment horizon Credit Suisse High is expected to generate 0.83 times more return on investment than Morgan Stanley. However, Credit Suisse High is 1.21 times less risky than Morgan Stanley. It trades about 0.2 of its potential returns per unit of risk. Morgan Stanley Emerging is currently generating about 0.01 per unit of risk. If you would invest 213.00 in Credit Suisse High on September 1, 2024 and sell it today you would earn a total of 7.00 from holding Credit Suisse High or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Credit Suisse High vs. Morgan Stanley Emerging
Performance |
| Timeline |
| Credit Suisse High |
| Morgan Stanley Emerging |
Credit Suisse and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Suisse and Morgan Stanley
The main advantage of trading using opposite Credit Suisse and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Suisse position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.| Credit Suisse vs. Bny Mellon Municipalome | Credit Suisse vs. BNY Mellon High | Credit Suisse vs. Western Asset Global | Credit Suisse vs. Mfs Intermediate High |
| Morgan Stanley vs. MFS Investment Grade | Morgan Stanley vs. Invesco High Income | Morgan Stanley vs. Blackrock Muniholdings Ny | Morgan Stanley vs. Credit Suisse High |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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