Correlation Between Commodity Return and Credit Suisse

Can any of the company-specific risk be diversified away by investing in both Commodity Return 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 Commodity Return and Credit Suisse into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Commodity Return Strategy and Credit Suisse Trust, you can compare the effects of market volatilities on Commodity Return 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 Commodity Return with a short position of Credit Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodity Return and Credit Suisse.

Diversification Opportunities for Commodity Return and Credit Suisse

1.0

Correlation Coefficient

Commodity Return  Credit Suisse

No risk reduction

The 3 months correlation between Commodity and Credit is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Commodity Return Strategy and Credit Suisse Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse Trust and Commodity Return 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 Commodity Return Strategy 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 Trust has no effect on the direction of Commodity Return i.e., Commodity Return and Credit Suisse go up and down completely randomly.

Pair Corralation between Commodity Return and Credit Suisse

Assuming the 90 days horizon Commodity Return Strategy is expected to under-perform the Credit Suisse. But the mutual fund apears to be less risky and, when comparing its historical volatility, Commodity Return Strategy is 1.02 times less risky than Credit Suisse. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Credit Suisse Trust is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,891  in Credit Suisse Trust on September 14, 2024 and sell it today you would lose (82.00) from holding Credit Suisse Trust or give up 4.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Commodity Return Strategy  vs.  Credit Suisse Trust

Commodity Return Strategy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Commodity Return Strategy are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Commodity Return is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Credit Suisse Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Suisse Trust are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Credit Suisse is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Commodity Return and Credit Suisse

The main advantage of trading using opposite Commodity Return and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodity Return 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 Commodity Return Strategy and Credit Suisse Trust 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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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.