Correlation Between T Mobile and NextEra Energy
Can any of the company-specific risk be diversified away by investing in both T Mobile and NextEra Energy 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 T Mobile and NextEra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Mobile and NextEra Energy, you can compare the effects of market volatilities on T Mobile and NextEra Energy 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 T Mobile with a short position of NextEra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Mobile and NextEra Energy.
Diversification Opportunities for T Mobile and NextEra Energy
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between T1MU34 and NextEra is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and NextEra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextEra Energy and T Mobile 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 T Mobile are associated (or correlated) with NextEra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextEra Energy has no effect on the direction of T Mobile i.e., T Mobile and NextEra Energy go up and down completely randomly.
Pair Corralation between T Mobile and NextEra Energy
Assuming the 90 days trading horizon T Mobile is expected to generate 0.77 times more return on investment than NextEra Energy. However, T Mobile is 1.3 times less risky than NextEra Energy. It trades about 0.11 of its potential returns per unit of risk. NextEra Energy is currently generating about 0.02 per unit of risk. If you would invest 36,763 in T Mobile on September 3, 2024 and sell it today you would earn a total of 37,113 from holding T Mobile or generate 100.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.6% |
| Values | Daily Returns |
T Mobile vs. NextEra Energy
Performance |
| Timeline |
| T Mobile |
| NextEra Energy |
T Mobile and NextEra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Mobile and NextEra Energy
The main advantage of trading using opposite T Mobile and NextEra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Mobile position performs unexpectedly, NextEra Energy 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 NextEra Energy will offset losses from the drop in NextEra Energy's long position.| T Mobile vs. Verizon Communications | T Mobile vs. Telefnica Brasil SA | T Mobile vs. TIM SA | T Mobile vs. Oi SA |
| NextEra Energy vs. Bio Techne | NextEra Energy vs. BIONTECH SE DRN | NextEra Energy vs. Agilent Technologies | NextEra Energy vs. T Mobile |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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