Correlation Between United Parcel and T Mobile

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

By analyzing existing cross correlation between United Parcel Service and T Mobile, you can compare the effects of market volatilities on United Parcel and T Mobile 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 United Parcel with a short position of T Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and T Mobile.

Diversification Opportunities for United Parcel and T Mobile

-0.75

Correlation Coefficient

United Parcel  T Mobile

Pay attention - limited upside

The 3 months correlation between United and T1MU34 is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and United Parcel 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 United Parcel Service are associated (or correlated) with T Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of United Parcel i.e., United Parcel and T Mobile go up and down completely randomly.

Pair Corralation between United Parcel and T Mobile

Assuming the 90 days trading horizon United Parcel Service is expected to under-perform the T Mobile. In addition to that, United Parcel is 1.2 times more volatile than T Mobile. It trades about -0.09 of its total potential returns per unit of risk. T Mobile is currently generating about 0.11 per unit of volatility. If you would invest  67,441  in T Mobile on December 31, 2024 and sell it today you would earn a total of  9,158  from holding T Mobile or generate 13.58% return on investment over 90 days.

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

United Parcel Service  vs.  T Mobile

United Parcel Service

Risk-Adjusted Performance

Very Weak

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

T Mobile

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, T Mobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Parcel and T Mobile

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

The idea behind United Parcel Service and T Mobile 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.