Correlation Between T-Mobile and Gossan Resources

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

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

Diversification Opportunities for T-Mobile and Gossan Resources

0.6

Correlation Coefficient

T-Mobile  Gossan Resources

Poor diversification

The 3 months correlation between T-Mobile and Gossan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Gossan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gossan Resources 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 Gossan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gossan Resources has no effect on the direction of T-Mobile i.e., T-Mobile and Gossan Resources go up and down completely randomly.

Pair Corralation between T-Mobile and Gossan Resources

Assuming the 90 days horizon T-Mobile is expected to generate 10.28 times less return on investment than Gossan Resources. But when comparing it to its historical volatility, T Mobile is 18.42 times less risky than Gossan Resources. It trades about 0.15 of its potential returns per unit of risk. Gossan Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.75  in Gossan Resources on October 8, 2024 and sell it today you would lose (0.35) from holding Gossan Resources or give up 46.67% of portfolio value over 90 days.

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

T Mobile  vs.  Gossan Resources

T Mobile

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, T-Mobile reported solid returns over the last few months and may actually be approaching a breakup point.

Gossan Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gossan Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gossan Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T-Mobile and Gossan Resources

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

The idea behind T Mobile and Gossan Resources 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.