Correlation Between T-Mobile and Spacetalk

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

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

Diversification Opportunities for T-Mobile and Spacetalk

-0.73

Correlation Coefficient

T-Mobile  Spacetalk

Pay attention - limited upside

The 3 months correlation between T-Mobile and Spacetalk is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Spacetalk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spacetalk 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 Spacetalk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spacetalk has no effect on the direction of T-Mobile i.e., T-Mobile and Spacetalk go up and down completely randomly.

Pair Corralation between T-Mobile and Spacetalk

Assuming the 90 days horizon T Mobile is expected to under-perform the Spacetalk. But the stock apears to be less risky and, when comparing its historical volatility, T Mobile is 3.28 times less risky than Spacetalk. The stock trades about -0.22 of its potential returns per unit of risk. The Spacetalk is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9.70  in Spacetalk on October 11, 2024 and sell it today you would earn a total of  0.20  from holding Spacetalk or generate 2.06% return on investment over 90 days.

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

T Mobile  vs.  Spacetalk

T Mobile

Risk-Adjusted Performance

4 of 100

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 nearly stable basic indicators, T-Mobile is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Spacetalk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Spacetalk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Spacetalk reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T-Mobile and Spacetalk

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

The idea behind T Mobile and Spacetalk 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.