Correlation Between T-MOBILE and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both T-MOBILE and Chesapeake Utilities 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 Chesapeake Utilities 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 Chesapeake Utilities, you can compare the effects of market volatilities on T-MOBILE and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of T-MOBILE and Chesapeake Utilities.
Diversification Opportunities for T-MOBILE and Chesapeake Utilities
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between T-MOBILE and Chesapeake is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of T-MOBILE i.e., T-MOBILE and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between T-MOBILE and Chesapeake Utilities
Assuming the 90 days trading horizon T MOBILE US is expected to generate 0.86 times more return on investment than Chesapeake Utilities. However, T MOBILE US is 1.16 times less risky than Chesapeake Utilities. It trades about 0.08 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.02 per unit of risk. If you would invest 13,187 in T MOBILE US on October 23, 2024 and sell it today you would earn a total of 7,848 from holding T MOBILE US or generate 59.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
T MOBILE US vs. Chesapeake Utilities
Performance |
| Timeline |
| T MOBILE US |
| Chesapeake Utilities |
T-MOBILE and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T-MOBILE and Chesapeake Utilities
The main advantage of trading using opposite T-MOBILE and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T-MOBILE position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| T-MOBILE vs. ALEFARM BREWING DK 05 | T-MOBILE vs. Nufarm Limited | T-MOBILE vs. North American Construction | T-MOBILE vs. PLAY2CHILL SA ZY |
| Chesapeake Utilities vs. STMicroelectronics NV | Chesapeake Utilities vs. SOUTHWEST AIRLINES | Chesapeake Utilities vs. Richardson Electronics | Chesapeake Utilities vs. Renesas Electronics |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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