Correlation Between CME and Credit Suisse
Can any of the company-specific risk be diversified away by investing in both CME 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 CME and Credit Suisse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CME Group and Credit Suisse Group, you can compare the effects of market volatilities on CME 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 CME with a short position of Credit Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of CME and Credit Suisse.
Diversification Opportunities for CME and Credit Suisse
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CME and Credit is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding CME Group and Credit Suisse Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse Group and CME 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 CME Group 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 Group has no effect on the direction of CME i.e., CME and Credit Suisse go up and down completely randomly.
Pair Corralation between CME and Credit Suisse
Considering the 90-day investment horizon CME Group is expected to generate 0.18 times more return on investment than Credit Suisse. However, CME Group is 5.67 times less risky than Credit Suisse. It trades about 0.09 of its potential returns per unit of risk. Credit Suisse Group is currently generating about -0.11 per unit of risk. If you would invest 15,464 in CME Group on September 10, 2024 and sell it today you would earn a total of 8,474 from holding CME Group or generate 54.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 24.44% |
Values | Daily Returns |
CME Group vs. Credit Suisse Group
Performance |
Timeline |
CME Group |
Credit Suisse Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CME and Credit Suisse Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CME and Credit Suisse
The main advantage of trading using opposite CME and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CME 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 CME Group and Credit Suisse Group 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.Credit Suisse vs. Banco Bilbao Vizcaya | Credit Suisse vs. Agricultural Bank | Credit Suisse vs. Mitsubishi UFJ Financial | Credit Suisse vs. Barclays PLC |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |