Correlation Between Credit Suisse and Bank of America
Can any of the company-specific risk be diversified away by investing in both Credit Suisse and Bank of America 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 Credit Suisse and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Suisse Group and Bank of America, you can compare the effects of market volatilities on Credit Suisse and Bank of America 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 Credit Suisse with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Suisse and Bank of America.
Diversification Opportunities for Credit Suisse and Bank of America
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Credit and Bank is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Credit Suisse Group and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America and Credit Suisse 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 Credit Suisse Group are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Credit Suisse i.e., Credit Suisse and Bank of America go up and down completely randomly.
Pair Corralation between Credit Suisse and Bank of America
Allowing for the 90-day total investment horizon Credit Suisse Group is expected to under-perform the Bank of America. In addition to that, Credit Suisse is 2.89 times more volatile than Bank of America. It trades about -0.13 of its total potential returns per unit of risk. Bank of America is currently generating about 0.02 per unit of volatility. If you would invest 3,438 in Bank of America on January 26, 2024 and sell it today you would earn a total of 353.00 from holding Bank of America or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 54.32% |
| Values | Daily Returns |
Credit Suisse Group vs. Bank of America
Performance |
| Timeline |
| Credit Suisse Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bank of America |
Credit Suisse and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Suisse and Bank of America
The main advantage of trading using opposite Credit Suisse and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Suisse position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Credit Suisse vs. Barclays PLC ADR | Credit Suisse vs. HSBC Holdings PLC | Credit Suisse vs. ING Group NV | Credit Suisse vs. Citigroup |
| Bank of America vs. Aquagold International | Bank of America vs. Thrivent High Yield | Bank of America vs. Morningstar Unconstrained Allocation | Bank of America vs. Via Renewables |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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