Correlation Between T-MOBILE and MGIC INVESTMENT

Can any of the company-specific risk be diversified away by investing in both T-MOBILE and MGIC INVESTMENT 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 MGIC INVESTMENT 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 MGIC INVESTMENT, you can compare the effects of market volatilities on T-MOBILE and MGIC INVESTMENT 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 MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of T-MOBILE and MGIC INVESTMENT.

Diversification Opportunities for T-MOBILE and MGIC INVESTMENT

0.64

Correlation Coefficient

T-MOBILE  MGIC INVESTMENT

Poor diversification

The 3 months correlation between T-MOBILE and MGIC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT 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 MGIC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC INVESTMENT has no effect on the direction of T-MOBILE i.e., T-MOBILE and MGIC INVESTMENT go up and down completely randomly.

Pair Corralation between T-MOBILE and MGIC INVESTMENT

Assuming the 90 days trading horizon T MOBILE US is expected to generate 1.02 times more return on investment than MGIC INVESTMENT. However, T-MOBILE is 1.02 times more volatile than MGIC INVESTMENT. It trades about 0.12 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.12 per unit of risk. If you would invest  12,398  in T MOBILE US on October 22, 2024 and sell it today you would earn a total of  8,837  from holding T MOBILE US or generate 71.28% return on investment over 90 days.

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

T MOBILE US  vs.  MGIC INVESTMENT

T MOBILE US

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE US are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

MGIC INVESTMENT

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MGIC INVESTMENT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, MGIC INVESTMENT 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 MGIC INVESTMENT

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

The idea behind T MOBILE US and MGIC INVESTMENT 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.