Correlation Between T Mobile and Exxon Mobil

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

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

Diversification Opportunities for T Mobile and Exxon Mobil

0.81

Correlation Coefficient

T Mobile  Exxon Mobil

Very poor diversification

The 3 months correlation between T1MU34 and Exxon is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil and T Mobile 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 T Mobile are associated (or correlated) with Exxon Mobil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil has no effect on the direction of T Mobile i.e., T Mobile and Exxon Mobil go up and down completely randomly.

Pair Corralation between T Mobile and Exxon Mobil

Assuming the 90 days trading horizon T Mobile is expected to generate 1.18 times more return on investment than Exxon Mobil. However, T Mobile is 1.18 times more volatile than Exxon Mobil. It trades about 0.09 of its potential returns per unit of risk. Exxon Mobil is currently generating about -0.09 per unit of risk. If you would invest  68,296  in T Mobile on September 17, 2024 and sell it today you would earn a total of  2,054  from holding T Mobile or generate 3.01% return on investment over 90 days.

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

T Mobile  vs.  Exxon Mobil

T Mobile

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 21 (%) 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.

Exxon Mobil

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Exxon Mobil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with T Mobile and Exxon Mobil

The main advantage of trading using opposite T Mobile and Exxon Mobil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Mobile position performs unexpectedly, Exxon Mobil 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 Exxon Mobil will offset losses from the drop in Exxon Mobil's long position.

The idea behind T Mobile and Exxon Mobil 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.