Correlation Between Home Federal and T Mobile

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

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

Diversification Opportunities for Home Federal and T Mobile

-0.14

Correlation Coefficient

Home Federal  T Mobile

Good diversification

The 3 months correlation between Home and TMUS is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and Home Federal 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 Home Federal Bancorp 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 Home Federal i.e., Home Federal and T Mobile go up and down completely randomly.

Pair Corralation between Home Federal and T Mobile

Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 69.08 times more return on investment than T Mobile. However, Home Federal is 69.08 times more volatile than T Mobile. It trades about 0.09 of its potential returns per unit of risk. T Mobile is currently generating about 0.13 per unit of risk. If you would invest  1,083  in Home Federal Bancorp on October 7, 2024 and sell it today you would earn a total of  191.00  from holding Home Federal Bancorp or generate 17.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.27%
Values	Daily Returns

Home Federal Bancorp  vs.  T Mobile

Home Federal Bancorp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Home Federal Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Home Federal is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

T Mobile

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, T Mobile is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Home Federal and T Mobile

The main advantage of trading using opposite Home Federal and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal 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 Home Federal Bancorp 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 CEOs Directory module to screen CEOs from public companies around the world.