Correlation Between Smallcap World and Credit Suisse
Can any of the company-specific risk be diversified away by investing in both Smallcap World 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 Smallcap World and Credit Suisse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap World Fund and Credit Suisse Multialternative, you can compare the effects of market volatilities on Smallcap World 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 Smallcap World with a short position of Credit Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap World and Credit Suisse.
Diversification Opportunities for Smallcap World and Credit Suisse
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smallcap and Credit is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap World Fund 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 Smallcap World 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 Smallcap World 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 Multia has no effect on the direction of Smallcap World i.e., Smallcap World and Credit Suisse go up and down completely randomly.
Pair Corralation between Smallcap World and Credit Suisse
Assuming the 90 days horizon Smallcap World is expected to generate 1.3 times less return on investment than Credit Suisse. In addition to that, Smallcap World is 1.14 times more volatile than Credit Suisse Multialternative. It trades about 0.06 of its total potential returns per unit of risk. Credit Suisse Multialternative is currently generating about 0.09 per unit of volatility. If you would invest 966.00 in Credit Suisse Multialternative on September 1, 2024 and sell it today you would earn a total of 93.00 from holding Credit Suisse Multialternative or generate 9.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Smallcap World Fund vs. Credit Suisse Multialternative
Performance |
| Timeline |
| Smallcap World |
| Credit Suisse Multia |
Smallcap World and Credit Suisse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap World and Credit Suisse
The main advantage of trading using opposite Smallcap World and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap World 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.| Smallcap World vs. New World Fund | Smallcap World vs. Washington Mutual Investors | Smallcap World vs. Europacific Growth Fund | Smallcap World vs. New Perspective Fund |
| Credit Suisse vs. Nationwide Growth Fund | Credit Suisse vs. T Rowe Price | Credit Suisse vs. T Rowe Price | Credit Suisse vs. Eip Growth And |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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