Correlation Between Deutsche Telekom and T-Mobile
Can any of the company-specific risk be diversified away by investing in both Deutsche Telekom 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 Deutsche Telekom and T-Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Telekom AG and T Mobile, you can compare the effects of market volatilities on Deutsche Telekom 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 Deutsche Telekom with a short position of T-Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and T-Mobile.
Diversification Opportunities for Deutsche Telekom and T-Mobile
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Deutsche and T-Mobile is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and Deutsche Telekom 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 Deutsche Telekom AG 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 Deutsche Telekom i.e., Deutsche Telekom and T-Mobile go up and down completely randomly.
Pair Corralation between Deutsche Telekom and T-Mobile
Assuming the 90 days trading horizon Deutsche Telekom is expected to generate 2.18 times less return on investment than T-Mobile. In addition to that, Deutsche Telekom is 1.31 times more volatile than T Mobile. It trades about 0.14 of its total potential returns per unit of risk. T Mobile is currently generating about 0.4 per unit of volatility. If you would invest 18,372 in T Mobile on August 31, 2024 and sell it today you would earn a total of 5,178 from holding T Mobile or generate 28.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Telekom AG vs. T Mobile
Performance |
| Timeline |
| Deutsche Telekom |
| T Mobile |
Deutsche Telekom and T-Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Telekom and T-Mobile
The main advantage of trading using opposite Deutsche Telekom and T-Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Telekom 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.| Deutsche Telekom vs. Gaztransport Technigaz SA | Deutsche Telekom vs. Sims Metal Management | Deutsche Telekom vs. Transport International Holdings | Deutsche Telekom vs. American Eagle Outfitters |
| T-Mobile vs. ATT Inc | T-Mobile vs. Deutsche Telekom AG | T-Mobile vs. Superior Plus Corp | T-Mobile vs. NMI Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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