Correlation Between Liberty Global and T Mobile

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

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

Diversification Opportunities for Liberty Global and T Mobile

-0.05

Correlation Coefficient

Liberty Global  T Mobile

Good diversification

The 3 months correlation between Liberty and TMUS is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Global PLC and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and Liberty Global 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 Liberty Global PLC 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 Liberty Global i.e., Liberty Global and T Mobile go up and down completely randomly.

Pair Corralation between Liberty Global and T Mobile

Assuming the 90 days horizon Liberty Global PLC is expected to under-perform the T Mobile. In addition to that, Liberty Global is 5.95 times more volatile than T Mobile. It trades about -0.07 of its total potential returns per unit of risk. T Mobile is currently generating about -0.01 per unit of volatility. If you would invest  22,197  in T Mobile on October 20, 2024 and sell it today you would lose (300.00) from holding T Mobile or give up 1.35% of portfolio value over 90 days.

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

Liberty Global PLC  vs.  T Mobile

Liberty Global PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Global PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

T Mobile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T Mobile has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Liberty Global and T Mobile

The main advantage of trading using opposite Liberty Global and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Global 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 Liberty Global PLC 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.