Correlation Between T Mobile and Gen Digital

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

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

Diversification Opportunities for T Mobile and Gen Digital

-0.5

Correlation Coefficient

T Mobile  Gen Digital

Very good diversification

The 3 months correlation between T1MU34 and Gen is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Gen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen Digital 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 Gen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen Digital has no effect on the direction of T Mobile i.e., T Mobile and Gen Digital go up and down completely randomly.

Pair Corralation between T Mobile and Gen Digital

Assuming the 90 days trading horizon T Mobile is expected to generate 3.31 times more return on investment than Gen Digital. However, T Mobile is 3.31 times more volatile than Gen Digital. It trades about 0.06 of its potential returns per unit of risk. Gen Digital is currently generating about -0.12 per unit of risk. If you would invest  68,505  in T Mobile on December 23, 2024 and sell it today you would earn a total of  4,461  from holding T Mobile or generate 6.51% return on investment over 90 days.

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

T Mobile  vs.  Gen Digital

T Mobile

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, T Mobile may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gen Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gen Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Gen Digital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with T Mobile and Gen Digital

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

The idea behind T Mobile and Gen Digital 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.