Correlation Between T Mobile and Sun Communities

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

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

Diversification Opportunities for T Mobile and Sun Communities

-0.1

Correlation Coefficient

T Mobile  Sun Communities

Good diversification

The 3 months correlation between T1MU34 and Sun is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Sun Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Communities 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 Sun Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Communities has no effect on the direction of T Mobile i.e., T Mobile and Sun Communities go up and down completely randomly.

Pair Corralation between T Mobile and Sun Communities

Assuming the 90 days trading horizon T Mobile is expected to generate 0.68 times more return on investment than Sun Communities. However, T Mobile is 1.46 times less risky than Sun Communities. It trades about 0.25 of its potential returns per unit of risk. Sun Communities is currently generating about -0.05 per unit of risk. If you would invest  56,637  in T Mobile on September 16, 2024 and sell it today you would earn a total of  13,713  from holding T Mobile or generate 24.21% return on investment over 90 days.

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

T Mobile  vs.  Sun Communities

T Mobile

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 19 (%) 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.

Sun Communities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Communities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with T Mobile and Sun Communities

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

The idea behind T Mobile and Sun Communities 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..