Correlation Between Frontier Communications and T Mobile
Can any of the company-specific risk be diversified away by investing in both Frontier 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 Frontier 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 Frontier Communications Parent and T Mobile, you can compare the effects of market volatilities on Frontier 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 Frontier Communications with a short position of T Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Communications and T Mobile.
Diversification Opportunities for Frontier Communications and T Mobile
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Frontier and TMUS is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Communications Parent and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and Frontier 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 Frontier Communications Parent 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 Frontier Communications i.e., Frontier Communications and T Mobile go up and down completely randomly.
Pair Corralation between Frontier Communications and T Mobile
Given the investment horizon of 90 days Frontier Communications is expected to generate 37.79 times less return on investment than T Mobile. But when comparing it to its historical volatility, Frontier Communications Parent is 18.08 times less risky than T Mobile. It trades about 0.18 of its potential returns per unit of risk. T Mobile is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 22,143 in T Mobile on November 28, 2024 and sell it today you would earn a total of 4,215 from holding T Mobile or generate 19.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Communications Parent vs. T Mobile
Performance |
| Timeline |
| Frontier Communications |
| T Mobile |
Frontier Communications and T Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Communications and T Mobile
The main advantage of trading using opposite Frontier Communications and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier 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.| Frontier Communications vs. Cable One | Frontier Communications vs. Charter Communications | Frontier Communications vs. Liberty Broadband Srs | Frontier Communications vs. ATN International |
| T Mobile vs. ATT Inc | T Mobile vs. Comcast Corp | T Mobile vs. Lumen Technologies | T Mobile vs. Verizon Communications |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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