Correlation Between T-Mobile and E3 LITHIUM

Can any of the company-specific risk be diversified away by investing in both T-Mobile and E3 LITHIUM 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 E3 LITHIUM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between T Mobile and E3 LITHIUM LTD, you can compare the effects of market volatilities on T-Mobile and E3 LITHIUM 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 E3 LITHIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of T-Mobile and E3 LITHIUM.

Diversification Opportunities for T-Mobile and E3 LITHIUM

-0.7

Correlation Coefficient

T-Mobile  E3 LITHIUM

Excellent diversification

The 3 months correlation between T-Mobile and OW3 is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and E3 LITHIUM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E3 LITHIUM LTD 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 E3 LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E3 LITHIUM LTD has no effect on the direction of T-Mobile i.e., T-Mobile and E3 LITHIUM go up and down completely randomly.

Pair Corralation between T-Mobile and E3 LITHIUM

Assuming the 90 days horizon T Mobile is expected to generate 0.57 times more return on investment than E3 LITHIUM. However, T Mobile is 1.76 times less risky than E3 LITHIUM. It trades about 0.1 of its potential returns per unit of risk. E3 LITHIUM LTD is currently generating about -0.05 per unit of risk. If you would invest  21,321  in T Mobile on December 21, 2024 and sell it today you would earn a total of  2,614  from holding T Mobile or generate 12.26% 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.  E3 LITHIUM LTD

T Mobile

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, T-Mobile reported solid returns over the last few months and may actually be approaching a breakup point.

E3 LITHIUM LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days E3 LITHIUM LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with T-Mobile and E3 LITHIUM

The main advantage of trading using opposite T-Mobile and E3 LITHIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T-Mobile position performs unexpectedly, E3 LITHIUM 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 E3 LITHIUM will offset losses from the drop in E3 LITHIUM's long position.

The idea behind T Mobile and E3 LITHIUM LTD 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.