Correlation Between T-MOBILE and CARSALESCOM

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

Diversification Opportunities for T-MOBILE and CARSALESCOM

0.08

Correlation Coefficient

T-MOBILE  CARSALESCOM

Significant diversification

The 3 months correlation between T-MOBILE and CARSALESCOM is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of T-MOBILE i.e., T-MOBILE and CARSALESCOM go up and down completely randomly.

Pair Corralation between T-MOBILE and CARSALESCOM

Assuming the 90 days trading horizon T MOBILE US is expected to generate 0.79 times more return on investment than CARSALESCOM. However, T MOBILE US is 1.27 times less risky than CARSALESCOM. It trades about 0.41 of its potential returns per unit of risk. CARSALESCOM is currently generating about -0.21 per unit of risk. If you would invest  22,933  in T MOBILE US on December 4, 2024 and sell it today you would earn a total of  3,072  from holding T MOBILE US or generate 13.4% return on investment over 90 days.

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

T MOBILE US  vs.  CARSALESCOM

T MOBILE US

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE US are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, T-MOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

CARSALESCOM

Risk-Adjusted Performance

Very Weak

Over the last 90 days CARSALESCOM 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 basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with T-MOBILE and CARSALESCOM

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

The idea behind T MOBILE US and CARSALESCOM 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.