Correlation Between Lumen Technologies, and T Mobile

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

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

Diversification Opportunities for Lumen Technologies, and T Mobile

0.36

Correlation Coefficient

Lumen Technologies,  T Mobile

Weak diversification

The 3 months correlation between Lumen and T1MU34 is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies, and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and Lumen Technologies, 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 Lumen Technologies, 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 Lumen Technologies, i.e., Lumen Technologies, and T Mobile go up and down completely randomly.

Pair Corralation between Lumen Technologies, and T Mobile

Assuming the 90 days trading horizon Lumen Technologies, is expected to under-perform the T Mobile. In addition to that, Lumen Technologies, is 2.47 times more volatile than T Mobile. It trades about -0.08 of its total potential returns per unit of risk. T Mobile is currently generating about -0.18 per unit of volatility. If you would invest  73,575  in T Mobile on October 6, 2024 and sell it today you would lose (5,983) from holding T Mobile or give up 8.13% of portfolio value over 90 days.

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

Lumen Technologies,  vs.  T Mobile

Lumen Technologies,

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lumen Technologies, are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Lumen Technologies, may actually be approaching a critical reversion point that can send shares even higher in February 2025.

T Mobile

Risk-Adjusted Performance

14 of 100

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. Despite somewhat weak primary indicators, T Mobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumen Technologies, and T Mobile

The main advantage of trading using opposite Lumen Technologies, and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumen Technologies, 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 Lumen Technologies, 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.