Correlation Between Altice USA and T Mobile

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

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

Diversification Opportunities for Altice USA and T Mobile

0.03

Correlation Coefficient

Altice USA  T Mobile

Significant diversification

The 3 months correlation between Altice and TMUS is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Altice USA and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and Altice USA 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 Altice USA 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 Altice USA i.e., Altice USA and T Mobile go up and down completely randomly.

Pair Corralation between Altice USA and T Mobile

Given the investment horizon of 90 days Altice USA is expected to generate 1.93 times more return on investment than T Mobile. However, Altice USA is 1.93 times more volatile than T Mobile. It trades about 0.11 of its potential returns per unit of risk. T Mobile is currently generating about 0.18 per unit of risk. If you would invest  234.00  in Altice USA on December 28, 2024 and sell it today you would earn a total of  47.00  from holding Altice USA or generate 20.09% return on investment over 90 days.

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

Altice USA  vs.  T Mobile

Altice USA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altice USA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Altice USA unveiled solid returns over the last few months and may actually be approaching a breakup point.

T Mobile

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, T Mobile unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altice USA and T Mobile

The main advantage of trading using opposite Altice USA and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altice USA 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 Altice USA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.