Correlation Between T-Mobile and GrafTech International
Can any of the company-specific risk be diversified away by investing in both T-Mobile and GrafTech International 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 GrafTech International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Mobile and GrafTech International, you can compare the effects of market volatilities on T-Mobile and GrafTech International 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 GrafTech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of T-Mobile and GrafTech International.
Diversification Opportunities for T-Mobile and GrafTech International
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between T-Mobile and GrafTech is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and GrafTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrafTech International 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 GrafTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrafTech International has no effect on the direction of T-Mobile i.e., T-Mobile and GrafTech International go up and down completely randomly.
Pair Corralation between T-Mobile and GrafTech International
Assuming the 90 days horizon T Mobile is expected to generate 0.26 times more return on investment than GrafTech International. However, T Mobile is 3.8 times less risky than GrafTech International. It trades about 0.07 of its potential returns per unit of risk. GrafTech International is currently generating about -0.02 per unit of risk. If you would invest 12,986 in T Mobile on October 12, 2024 and sell it today you would earn a total of 7,704 from holding T Mobile or generate 59.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Mobile vs. GrafTech International
Performance |
| Timeline |
| T Mobile |
| GrafTech International |
T-Mobile and GrafTech International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T-Mobile and GrafTech International
The main advantage of trading using opposite T-Mobile and GrafTech International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T-Mobile position performs unexpectedly, GrafTech International 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 GrafTech International will offset losses from the drop in GrafTech International's long position.| T-Mobile vs. AEGEAN AIRLINES | T-Mobile vs. CHINA TONTINE WINES | T-Mobile vs. Singapore Airlines Limited | T-Mobile vs. China Eastern Airlines |
| GrafTech International vs. The Yokohama Rubber | GrafTech International vs. Materialise NV | GrafTech International vs. Martin Marietta Materials | GrafTech International vs. THRACE PLASTICS |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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