Correlation Between T Mobile and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both T Mobile and Deutsche Telekom 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 Deutsche Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Mobile and Deutsche Telekom AG, you can compare the effects of market volatilities on T Mobile and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Mobile and Deutsche Telekom.
Diversification Opportunities for T Mobile and Deutsche Telekom
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TM5 and Deutsche is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of T Mobile i.e., T Mobile and Deutsche Telekom go up and down completely randomly.
Pair Corralation between T Mobile and Deutsche Telekom
Assuming the 90 days horizon T Mobile is expected to generate 1.86 times more return on investment than Deutsche Telekom. However, T Mobile is 1.86 times more volatile than Deutsche Telekom AG. It trades about 0.22 of its potential returns per unit of risk. Deutsche Telekom AG is currently generating about 0.28 per unit of risk. If you would invest 15,868 in T Mobile on August 30, 2024 and sell it today you would earn a total of 7,552 from holding T Mobile or generate 47.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Mobile vs. Deutsche Telekom AG
Performance |
| Timeline |
| T Mobile |
| Deutsche Telekom |
T Mobile and Deutsche Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Mobile and Deutsche Telekom
The main advantage of trading using opposite T Mobile and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Mobile position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom's long position.| T Mobile vs. Federal Agricultural Mortgage | T Mobile vs. BW OFFSHORE LTD | T Mobile vs. G III Apparel Group | T Mobile vs. AUST AGRICULTURAL |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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