Correlation Between T-Mobile and Freeport McMoRan
Can any of the company-specific risk be diversified away by investing in both T-Mobile and Freeport McMoRan 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 Freeport McMoRan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Mobile and Freeport McMoRan, you can compare the effects of market volatilities on T-Mobile and Freeport McMoRan 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 Freeport McMoRan. Check out your portfolio center. Please also check ongoing floating volatility patterns of T-Mobile and Freeport McMoRan.
Diversification Opportunities for T-Mobile and Freeport McMoRan
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between T-Mobile and Freeport is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 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 Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of T-Mobile i.e., T-Mobile and Freeport McMoRan go up and down completely randomly.
Pair Corralation between T-Mobile and Freeport McMoRan
Assuming the 90 days horizon T Mobile is expected to generate 0.85 times more return on investment than Freeport McMoRan. However, T Mobile is 1.18 times less risky than Freeport McMoRan. It trades about 0.13 of its potential returns per unit of risk. Freeport McMoRan is currently generating about -0.09 per unit of risk. If you would invest 21,255 in T Mobile on November 3, 2024 and sell it today you would earn a total of 1,215 from holding T Mobile or generate 5.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Mobile vs. Freeport McMoRan
Performance |
| Timeline |
| T Mobile |
| Freeport McMoRan |
T-Mobile and Freeport McMoRan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T-Mobile and Freeport McMoRan
The main advantage of trading using opposite T-Mobile and Freeport McMoRan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T-Mobile position performs unexpectedly, Freeport McMoRan 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 Freeport McMoRan will offset losses from the drop in Freeport McMoRan's long position.| T-Mobile vs. SUN LIFE FINANCIAL | T-Mobile vs. CullenFrost Bankers | T-Mobile vs. Ares Management Corp | T-Mobile vs. Sun Life Financial |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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