Correlation Between MTN Group and U S Cellular
Can any of the company-specific risk be diversified away by investing in both MTN Group and U S Cellular 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 MTN Group and U S Cellular into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTN Group Ltd and United States Cellular, you can compare the effects of market volatilities on MTN Group and U S Cellular 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 MTN Group with a short position of U S Cellular. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTN Group and U S Cellular.
Diversification Opportunities for MTN Group and U S Cellular
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between MTN and USM is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding MTN Group Ltd and United States Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Cellular and MTN Group 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 MTN Group Ltd are associated (or correlated) with U S Cellular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Cellular has no effect on the direction of MTN Group i.e., MTN Group and U S Cellular go up and down completely randomly.
Pair Corralation between MTN Group and U S Cellular
Assuming the 90 days horizon MTN Group Ltd is expected to generate 3.08 times more return on investment than U S Cellular. However, MTN Group is 3.08 times more volatile than United States Cellular. It trades about 0.32 of its potential returns per unit of risk. United States Cellular is currently generating about 0.02 per unit of risk. If you would invest 488.00 in MTN Group Ltd on November 3, 2024 and sell it today you would earn a total of 129.00 from holding MTN Group Ltd or generate 26.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTN Group Ltd vs. United States Cellular
Performance |
| Timeline |
| MTN Group |
| United States Cellular |
MTN Group and U S Cellular Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTN Group and U S Cellular
The main advantage of trading using opposite MTN Group and U S Cellular positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTN Group position performs unexpectedly, U S Cellular 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 U S Cellular will offset losses from the drop in U S Cellular's long position.| MTN Group vs. XL Axiata Tbk | MTN Group vs. Telenor ASA ADR | MTN Group vs. KT Corporation | MTN Group vs. Vodacom Group Ltd |
| U S Cellular vs. Telephone and Data | U S Cellular vs. Vodafone Group PLC | U S Cellular vs. Lumen Technologies | U S Cellular vs. Altice USA |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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