Correlation Between T MOBILE and ATT

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

Diversification Opportunities for T MOBILE and ATT

0.95

Correlation Coefficient

T MOBILE  ATT

Almost no diversification

The 3 months correlation between TM5 and ATT is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE INCDL 00001 and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of T MOBILE i.e., T MOBILE and ATT go up and down completely randomly.

Pair Corralation between T MOBILE and ATT

Assuming the 90 days trading horizon T MOBILE INCDL 00001 is expected to generate 1.12 times more return on investment than ATT. However, T MOBILE is 1.12 times more volatile than ATT Inc. It trades about 0.26 of its potential returns per unit of risk. ATT Inc is currently generating about 0.21 per unit of risk. If you would invest  18,229  in T MOBILE INCDL 00001 on September 13, 2024 and sell it today you would earn a total of  4,266  from holding T MOBILE INCDL 00001 or generate 23.4% return on investment over 90 days.

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

T MOBILE INCDL 00001  vs.  ATT Inc

T MOBILE INCDL

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE INCDL 00001 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, T MOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

ATT Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ATT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T MOBILE and ATT

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

The idea behind T MOBILE INCDL 00001 and ATT Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.