Correlation Between T Mobile and Altice USA

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

By analyzing existing cross correlation between T Mobile and Altice USA, you can compare the effects of market volatilities on T Mobile and Altice USA 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 Altice USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Mobile and Altice USA.

Diversification Opportunities for T Mobile and Altice USA

0.71

Correlation Coefficient

T Mobile  Altice USA

Poor diversification

The 3 months correlation between TMUS and Altice is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Altice USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altice USA 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 are associated (or correlated) with Altice USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altice USA has no effect on the direction of T Mobile i.e., T Mobile and Altice USA go up and down completely randomly.

Pair Corralation between T Mobile and Altice USA

Given the investment horizon of 90 days T Mobile is expected to generate 1.58 times less return on investment than Altice USA. But when comparing it to its historical volatility, T Mobile is 3.16 times less risky than Altice USA. It trades about 0.26 of its potential returns per unit of risk. Altice USA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  180.00  in Altice USA on September 2, 2024 and sell it today you would earn a total of  61.00  from holding Altice USA or generate 33.89% return on investment over 90 days.

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

T Mobile  vs.  Altice USA

T Mobile

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile 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.

Altice USA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altice USA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Altice USA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T Mobile and Altice USA

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

The idea behind T Mobile and Altice USA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.