Correlation Between Spirent Communications and T Mobile
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and T Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and T Mobile, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of T Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and T Mobile.
Diversification Opportunities for Spirent Communications and T Mobile
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spirent and TM5 is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and T Mobile go up and down completely randomly.
Pair Corralation between Spirent Communications and T Mobile
Assuming the 90 days horizon Spirent Communications is expected to generate 8.15 times less return on investment than T Mobile. But when comparing it to its historical volatility, Spirent Communications plc is 1.35 times less risky than T Mobile. It trades about 0.05 of its potential returns per unit of risk. T Mobile is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 21,100 in T Mobile on August 29, 2024 and sell it today you would earn a total of 1,940 from holding T Mobile or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. T Mobile
Performance |
| Timeline |
| Spirent Communications |
| T Mobile |
Spirent Communications and T Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and T Mobile
The main advantage of trading using opposite Spirent Communications and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. T Mobile | Spirent Communications vs. ATT Inc | Spirent Communications vs. Deutsche Telekom AG |
| T Mobile vs. Solstad Offshore ASA | T Mobile vs. SIEM OFFSHORE NEW | T Mobile vs. United Natural Foods | T Mobile vs. Canadian Utilities Limited |
Check out your portfolio center.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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