Correlation Between T MOBILE and Vestas Wind

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

Diversification Opportunities for T MOBILE and Vestas Wind

-0.39

Correlation Coefficient

T MOBILE  Vestas Wind

Very good diversification

The 3 months correlation between TM5 and Vestas is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems 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 Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of T MOBILE i.e., T MOBILE and Vestas Wind go up and down completely randomly.

Pair Corralation between T MOBILE and Vestas Wind

Assuming the 90 days trading horizon T MOBILE US is expected to generate 0.53 times more return on investment than Vestas Wind. However, T MOBILE US is 1.89 times less risky than Vestas Wind. It trades about -0.07 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.04 per unit of risk. If you would invest  21,290  in T MOBILE US on October 26, 2024 and sell it today you would lose (480.00) from holding T MOBILE US or give up 2.25% 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.  Vestas Wind Systems

T MOBILE US

Risk-Adjusted Performance

0 of 100

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.

Vestas Wind Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vestas Wind Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with T MOBILE and Vestas Wind

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

The idea behind T MOBILE US and Vestas Wind Systems 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.