Correlation Between T MOBILE and Postal Savings
Can any of the company-specific risk be diversified away by investing in both T MOBILE and Postal Savings 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 Postal Savings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T MOBILE US and Postal Savings Bank, you can compare the effects of market volatilities on T MOBILE and Postal Savings 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 Postal Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of T MOBILE and Postal Savings.
Diversification Opportunities for T MOBILE and Postal Savings
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between TM5 and Postal is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank 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 US are associated (or correlated) with Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of T MOBILE i.e., T MOBILE and Postal Savings go up and down completely randomly.
Pair Corralation between T MOBILE and Postal Savings
Assuming the 90 days trading horizon T MOBILE is expected to generate 4.29 times less return on investment than Postal Savings. But when comparing it to its historical volatility, T MOBILE US is 6.61 times less risky than Postal Savings. It trades about 0.14 of its potential returns per unit of risk. Postal Savings Bank is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Postal Savings Bank on September 19, 2024 and sell it today you would earn a total of 28.00 from holding Postal Savings Bank or generate 112.0% 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 US vs. Postal Savings Bank
Performance |
| Timeline |
| T MOBILE US |
| Postal Savings Bank |
T MOBILE and Postal Savings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T MOBILE and Postal Savings
The main advantage of trading using opposite T MOBILE and Postal Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T MOBILE position performs unexpectedly, Postal Savings 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 Postal Savings will offset losses from the drop in Postal Savings' long position.The idea behind T MOBILE US and Postal Savings Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Postal Savings vs. POSBO UNSPADRS20YC1 | Postal Savings vs. UTD OV BK LOC ADR1 | Postal Savings vs. Superior Plus Corp | Postal Savings vs. SIVERS SEMICONDUCTORS AB |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |