Correlation Between Annaly Capital and T Mobile

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

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

Diversification Opportunities for Annaly Capital and T Mobile

0.33

Correlation Coefficient

Annaly Capital  T Mobile

Weak diversification

The 3 months correlation between Annaly and T1MU34 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management, and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and Annaly Capital 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 Annaly Capital Management, 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 Annaly Capital i.e., Annaly Capital and T Mobile go up and down completely randomly.

Pair Corralation between Annaly Capital and T Mobile

Assuming the 90 days trading horizon Annaly Capital is expected to generate 2.32 times less return on investment than T Mobile. In addition to that, Annaly Capital is 1.1 times more volatile than T Mobile. It trades about 0.03 of its total potential returns per unit of risk. T Mobile is currently generating about 0.09 per unit of volatility. If you would invest  36,939  in T Mobile on October 10, 2024 and sell it today you would earn a total of  28,386  from holding T Mobile or generate 76.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.7%
Values	Daily Returns

Annaly Capital Management,  vs.  T Mobile

Annaly Capital Manag

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Annaly Capital Management, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Annaly Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

T Mobile

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, T Mobile may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Annaly Capital and T Mobile

The main advantage of trading using opposite Annaly Capital and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annaly Capital 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 Annaly Capital Management, 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.