Correlation Between Commodityrealreturn and Credit Suisse
Can any of the company-specific risk be diversified away by investing in both Commodityrealreturn 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 Commodityrealreturn and Credit Suisse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commodityrealreturn Strategy Fund and Credit Suisse Modity, you can compare the effects of market volatilities on Commodityrealreturn 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 Commodityrealreturn with a short position of Credit Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodityrealreturn and Credit Suisse.
Diversification Opportunities for Commodityrealreturn and Credit Suisse
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Commodityrealreturn and Credit is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Commodityrealreturn Strategy F and Credit Suisse Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse Modity and Commodityrealreturn 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 Commodityrealreturn Strategy Fund 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 Modity has no effect on the direction of Commodityrealreturn i.e., Commodityrealreturn and Credit Suisse go up and down completely randomly.
Pair Corralation between Commodityrealreturn and Credit Suisse
Assuming the 90 days horizon Commodityrealreturn Strategy Fund is expected to generate 12.71 times more return on investment than Credit Suisse. However, Commodityrealreturn is 12.71 times more volatile than Credit Suisse Modity. It trades about 0.03 of its potential returns per unit of risk. Credit Suisse Modity is currently generating about -0.01 per unit of risk. If you would invest 1,019 in Commodityrealreturn Strategy Fund on August 29, 2024 and sell it today you would earn a total of 146.00 from holding Commodityrealreturn Strategy Fund or generate 14.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commodityrealreturn Strategy F vs. Credit Suisse Modity
Performance |
| Timeline |
| Commodityrealreturn |
| Credit Suisse Modity |
Commodityrealreturn and Credit Suisse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commodityrealreturn and Credit Suisse
The main advantage of trading using opposite Commodityrealreturn and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodityrealreturn 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 Commodityrealreturn Strategy Fund and Credit Suisse Modity 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.
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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