Correlation Between T Mobile and Liberty Latin

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

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

Diversification Opportunities for T Mobile and Liberty Latin

-0.54

Correlation Coefficient

T Mobile  Liberty Latin

Excellent diversification

The 3 months correlation between TMUS and Liberty is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Liberty Latin America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Latin America 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 Liberty Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Latin America has no effect on the direction of T Mobile i.e., T Mobile and Liberty Latin go up and down completely randomly.

Pair Corralation between T Mobile and Liberty Latin

Given the investment horizon of 90 days T Mobile is expected to generate 0.4 times more return on investment than Liberty Latin. However, T Mobile is 2.51 times less risky than Liberty Latin. It trades about 0.09 of its potential returns per unit of risk. Liberty Latin America is currently generating about 0.0 per unit of risk. If you would invest  14,170  in T Mobile on October 5, 2024 and sell it today you would earn a total of  7,874  from holding T Mobile or generate 55.57% return on investment over 90 days.

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

T Mobile  vs.  Liberty Latin America

T Mobile

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, T Mobile may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Liberty Latin America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Latin America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with T Mobile and Liberty Latin

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

The idea behind T Mobile and Liberty Latin America 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..