Correlation Between Ford and Credit Suisse
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Credit Suisse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Credit Suisse Multialternative, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Credit Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Credit Suisse.
Diversification Opportunities for Ford and Credit Suisse
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Credit is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and Credit Suisse go up and down completely randomly.
Pair Corralation between Ford and Credit Suisse
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Credit Suisse. In addition to that, Ford is 8.71 times more volatile than Credit Suisse Multialternative. It trades about 0.0 of its total potential returns per unit of risk. Credit Suisse Multialternative is currently generating about 0.22 per unit of volatility. If you would invest 906.00 in Credit Suisse Multialternative on August 29, 2024 and sell it today you would earn a total of 14.00 from holding Credit Suisse Multialternative or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Credit Suisse Multialternative
Performance |
| Timeline |
| Ford Motor |
| Credit Suisse Multia |
Ford and Credit Suisse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Credit Suisse
The main advantage of trading using opposite Ford and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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