Correlation Between T MOBILE and Stanley Black

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

Diversification Opportunities for T MOBILE and Stanley Black

-0.2

Correlation Coefficient

T MOBILE  Stanley Black

Good diversification

The 3 months correlation between TM5 and Stanley is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and Stanley Black Decker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stanley Black Decker 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 Stanley Black. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stanley Black Decker has no effect on the direction of T MOBILE i.e., T MOBILE and Stanley Black go up and down completely randomly.

Pair Corralation between T MOBILE and Stanley Black

Assuming the 90 days trading horizon T MOBILE US is expected to generate 0.88 times more return on investment than Stanley Black. However, T MOBILE US is 1.13 times less risky than Stanley Black. It trades about 0.0 of its potential returns per unit of risk. Stanley Black Decker is currently generating about -0.11 per unit of risk. If you would invest  20,951  in T MOBILE US on October 26, 2024 and sell it today you would lose (141.00) from holding T MOBILE US or give up 0.67% of portfolio value over 90 days.

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

T MOBILE US  vs.  Stanley Black Decker

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.

Stanley Black Decker

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stanley Black Decker has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with T MOBILE and Stanley Black

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

The idea behind T MOBILE US and Stanley Black Decker 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.