Correlation Between Microsoft and Credit Suisse
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Credit Suisse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Credit Suisse High, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Credit Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Credit Suisse.
Diversification Opportunities for Microsoft and Credit Suisse
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Credit is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Credit Suisse High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse High and Microsoft 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 Microsoft 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 High has no effect on the direction of Microsoft i.e., Microsoft and Credit Suisse go up and down completely randomly.
Pair Corralation between Microsoft and Credit Suisse
Given the investment horizon of 90 days Microsoft is expected to generate 2.18 times less return on investment than Credit Suisse. In addition to that, Microsoft is 1.54 times more volatile than Credit Suisse High. It trades about 0.03 of its total potential returns per unit of risk. Credit Suisse High is currently generating about 0.11 per unit of volatility. If you would invest 206.00 in Credit Suisse High on August 28, 2024 and sell it today you would earn a total of 12.00 from holding Credit Suisse High or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Credit Suisse High
Performance |
| Timeline |
| Microsoft |
| Credit Suisse High |
Microsoft and Credit Suisse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Credit Suisse
The main advantage of trading using opposite Microsoft and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Credit Suisse vs. MFS Investment Grade | Credit Suisse vs. Invesco High Income | Credit Suisse vs. Eaton Vance National | Credit Suisse vs. Nuveen California Select |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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