Correlation Between T-MOBILE and HomeToGo

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

Diversification Opportunities for T-MOBILE and HomeToGo

-0.39

Correlation Coefficient

T-MOBILE  HomeToGo

Very good diversification

The 3 months correlation between T-MOBILE and HomeToGo is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE INCDL 00001 and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE 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 HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of T-MOBILE i.e., T-MOBILE and HomeToGo go up and down completely randomly.

Pair Corralation between T-MOBILE and HomeToGo

Assuming the 90 days trading horizon T MOBILE INCDL 00001 is expected to generate 0.87 times more return on investment than HomeToGo. However, T MOBILE INCDL 00001 is 1.15 times less risky than HomeToGo. It trades about 0.1 of its potential returns per unit of risk. HomeToGo SE is currently generating about -0.06 per unit of risk. If you would invest  21,216  in T MOBILE INCDL 00001 on December 24, 2024 and sell it today you would earn a total of  2,509  from holding T MOBILE INCDL 00001 or generate 11.83% return on investment over 90 days.

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

T MOBILE INCDL 00001  vs.  HomeToGo SE

T MOBILE INCDL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE INCDL 00001 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, T-MOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

HomeToGo SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days HomeToGo SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with T-MOBILE and HomeToGo

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

The idea behind T MOBILE INCDL 00001 and HomeToGo SE 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.