Correlation Between GM and Credit Suisse
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Credit Suisse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Credit Suisse, you can compare the effects of market volatilities on GM 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 GM with a short position of Credit Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Credit Suisse.
Diversification Opportunities for GM and Credit Suisse
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Credit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Credit Suisse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse and GM 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 General Motors 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 has no effect on the direction of GM i.e., GM and Credit Suisse go up and down completely randomly.
Pair Corralation between GM and Credit Suisse
If you would invest 3,275 in General Motors on September 12, 2024 and sell it today you would earn a total of 1,999 from holding General Motors or generate 61.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. Credit Suisse
Performance |
| Timeline |
| General Motors |
| Credit Suisse |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Credit Suisse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Credit Suisse
The main advantage of trading using opposite GM and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors and Credit Suisse 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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