Correlation Between T-Mobile and Wabash National

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

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

Diversification Opportunities for T-Mobile and Wabash National

0.78

Correlation Coefficient

T-Mobile  Wabash National

Poor diversification

The 3 months correlation between T-Mobile and Wabash is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National 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 Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of T-Mobile i.e., T-Mobile and Wabash National go up and down completely randomly.

Pair Corralation between T-Mobile and Wabash National

Assuming the 90 days horizon T Mobile is expected to generate 0.6 times more return on investment than Wabash National. However, T Mobile is 1.67 times less risky than Wabash National. It trades about 0.07 of its potential returns per unit of risk. Wabash National is currently generating about -0.02 per unit of risk. If you would invest  13,100  in T Mobile on October 15, 2024 and sell it today you would earn a total of  7,780  from holding T Mobile or generate 59.39% return on investment over 90 days.

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

T Mobile  vs.  Wabash National

T Mobile

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 3 (%) 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.

Wabash National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wabash National has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Wabash National is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with T-Mobile and Wabash National

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

The idea behind T Mobile and Wabash National 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.