Correlation Between T MOBILE and Air Canada

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

By analyzing existing cross correlation between T MOBILE INCDL 00001 and Air Canada, you can compare the effects of market volatilities on T MOBILE and Air Canada 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 Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of T MOBILE and Air Canada.

Diversification Opportunities for T MOBILE and Air Canada

0.93

Correlation Coefficient

T MOBILE  Air Canada

Almost no diversification

The 3 months correlation between TM5 and Air is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE INCDL 00001 and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada 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 INCDL 00001 are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of T MOBILE i.e., T MOBILE and Air Canada go up and down completely randomly.

Pair Corralation between T MOBILE and Air Canada

Assuming the 90 days trading horizon T MOBILE INCDL 00001 is expected to generate 0.53 times more return on investment than Air Canada. However, T MOBILE INCDL 00001 is 1.89 times less risky than Air Canada. It trades about 0.14 of its potential returns per unit of risk. Air Canada is currently generating about 0.04 per unit of risk. If you would invest  13,348  in T MOBILE INCDL 00001 on October 11, 2024 and sell it today you would earn a total of  7,467  from holding T MOBILE INCDL 00001 or generate 55.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.89%
Values	Daily Returns

T MOBILE INCDL 00001  vs.  Air Canada

T MOBILE INCDL

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE INCDL 00001 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, T MOBILE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Air Canada

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Canada are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Air Canada unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T MOBILE and Air Canada

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

The idea behind T MOBILE INCDL 00001 and Air Canada 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.