Correlation Between T MOBILE and Daimler Truck

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

By analyzing existing cross correlation between T MOBILE US and Daimler Truck Holding, you can compare the effects of market volatilities on T MOBILE and Daimler Truck 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 Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of T MOBILE and Daimler Truck.

Diversification Opportunities for T MOBILE and Daimler Truck

-0.7

Correlation Coefficient

T MOBILE  Daimler Truck

Excellent diversification

The 3 months correlation between TM5 and Daimler is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding 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 US are associated (or correlated) with Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of T MOBILE i.e., T MOBILE and Daimler Truck go up and down completely randomly.

Pair Corralation between T MOBILE and Daimler Truck

Assuming the 90 days trading horizon T MOBILE US is expected to generate 0.7 times more return on investment than Daimler Truck. However, T MOBILE US is 1.43 times less risky than Daimler Truck. It trades about 0.08 of its potential returns per unit of risk. Daimler Truck Holding is currently generating about 0.05 per unit of risk. If you would invest  12,833  in T MOBILE US on October 27, 2024 and sell it today you would earn a total of  7,817  from holding T MOBILE US or generate 60.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

T MOBILE US  vs.  Daimler Truck Holding

T MOBILE US

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T MOBILE US has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, T MOBILE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Daimler Truck Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daimler Truck Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Daimler Truck is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with T MOBILE and Daimler Truck

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

The idea behind T MOBILE US and Daimler Truck Holding 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.