Correlation Between Merck and T Mobile
Can any of the company-specific risk be diversified away by investing in both Merck 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 Merck and T Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and T Mobile, you can compare the effects of market volatilities on Merck 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 Merck with a short position of T Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and T Mobile.
Diversification Opportunities for Merck and T Mobile
Excellent diversification
The 3 months correlation between Merck and TMUS is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and Merck 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 Merck Company 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 Merck i.e., Merck and T Mobile go up and down completely randomly.
Pair Corralation between Merck and T Mobile
Considering the 90-day investment horizon Merck Company is expected to under-perform the T Mobile. In addition to that, Merck is 1.19 times more volatile than T Mobile. It trades about -0.12 of its total potential returns per unit of risk. T Mobile is currently generating about 0.48 per unit of volatility. If you would invest 22,143 in T Mobile on November 28, 2024 and sell it today you would earn a total of 4,911 from holding T Mobile or generate 22.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. T Mobile
Performance |
| Timeline |
| Merck Company |
| T Mobile |
Merck and T Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and T Mobile
The main advantage of trading using opposite Merck and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck 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 Merck Company 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.| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |