Correlation Between Allianz SE and T Mobile

Can any of the company-specific risk be diversified away by investing in both Allianz SE and T Mobile 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 Allianz SE and T Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allianz SE VNA and T Mobile, you can compare the effects of market volatilities on Allianz SE and T Mobile 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 Allianz SE with a short position of T Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianz SE and T Mobile.

Diversification Opportunities for Allianz SE and T Mobile

0.72

Correlation Coefficient

Allianz SE  T Mobile

Poor diversification

The 3 months correlation between Allianz and TM5 is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Allianz SE VNA and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and Allianz SE 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 Allianz SE VNA are associated (or correlated) with T Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of Allianz SE i.e., Allianz SE and T Mobile go up and down completely randomly.

Pair Corralation between Allianz SE and T Mobile

Assuming the 90 days trading horizon Allianz SE VNA is expected to generate 0.54 times more return on investment than T Mobile. However, Allianz SE VNA is 1.86 times less risky than T Mobile. It trades about 0.26 of its potential returns per unit of risk. T Mobile is currently generating about 0.09 per unit of risk. If you would invest  29,510  in Allianz SE VNA on December 24, 2024 and sell it today you would earn a total of  5,630  from holding Allianz SE VNA or generate 19.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Allianz SE VNA  vs.  T Mobile

Allianz SE VNA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz SE VNA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Allianz SE unveiled solid returns over the last few months and may actually be approaching a breakup point.

T Mobile

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, T Mobile may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Allianz SE and T Mobile

The main advantage of trading using opposite Allianz SE and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianz SE position performs unexpectedly, T Mobile 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 T Mobile will offset losses from the drop in T Mobile's long position.

The idea behind Allianz SE VNA and T Mobile 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.