Correlation Between Consolidated Communications and T-Mobile

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Can any of the company-specific risk be diversified away by investing in both Consolidated Communications 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 Consolidated Communications and T-Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Communications Holdings and T Mobile, you can compare the effects of market volatilities on Consolidated Communications 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 Consolidated Communications with a short position of T-Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Communications and T-Mobile.

Diversification Opportunities for Consolidated Communications and T-Mobile

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Consolidated and T-Mobile is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Communications Ho and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and Consolidated Communications 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 Consolidated Communications Holdings 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 Consolidated Communications i.e., Consolidated Communications and T-Mobile go up and down completely randomly.

Pair Corralation between Consolidated Communications and T-Mobile

Assuming the 90 days horizon Consolidated Communications Holdings is expected to generate 0.36 times more return on investment than T-Mobile. However, Consolidated Communications Holdings is 2.82 times less risky than T-Mobile. It trades about 0.12 of its potential returns per unit of risk. T Mobile is currently generating about -0.07 per unit of risk. If you would invest  444.00  in Consolidated Communications Holdings on October 8, 2024 and sell it today you would earn a total of  4.00  from holding Consolidated Communications Holdings or generate 0.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy87.5%
ValuesDaily Returns

Consolidated Communications Ho  vs.  T Mobile

 Performance 
       Timeline  
Consolidated Communications 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Good
Over the last 90 days Consolidated Communications Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Consolidated Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.
T Mobile 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, T-Mobile reported solid returns over the last few months and may actually be approaching a breakup point.

Consolidated Communications and T-Mobile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Consolidated Communications and T-Mobile

The main advantage of trading using opposite Consolidated Communications and T-Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Communications 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 Consolidated Communications Holdings 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.
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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