Correlation Between T MOBILE and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both T MOBILE and SBM OFFSHORE 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 SBM OFFSHORE 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 SBM OFFSHORE, you can compare the effects of market volatilities on T MOBILE and SBM OFFSHORE 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 SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of T MOBILE and SBM OFFSHORE.
Diversification Opportunities for T MOBILE and SBM OFFSHORE
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TM5 and SBM is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE 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 SBM OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM OFFSHORE has no effect on the direction of T MOBILE i.e., T MOBILE and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between T MOBILE and SBM OFFSHORE
Assuming the 90 days trading horizon T MOBILE US is expected to generate 0.84 times more return on investment than SBM OFFSHORE. However, T MOBILE US is 1.19 times less risky than SBM OFFSHORE. It trades about 0.03 of its potential returns per unit of risk. SBM OFFSHORE is currently generating about -0.1 per unit of risk. If you would invest 22,171 in T MOBILE US on September 12, 2024 and sell it today you would earn a total of 169.00 from holding T MOBILE US or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
T MOBILE US vs. SBM OFFSHORE
Performance |
| Timeline |
| T MOBILE US |
| SBM OFFSHORE |
T MOBILE and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T MOBILE and SBM OFFSHORE
The main advantage of trading using opposite T MOBILE and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T MOBILE position performs unexpectedly, SBM OFFSHORE 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 SBM OFFSHORE will offset losses from the drop in SBM OFFSHORE's long position.The idea behind T MOBILE US and SBM OFFSHORE 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.| SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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