Correlation Between T-MOBILE and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both T-MOBILE and Costco Wholesale 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 Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T MOBILE INCDL 00001 and Costco Wholesale, you can compare the effects of market volatilities on T-MOBILE and Costco Wholesale 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 Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of T-MOBILE and Costco Wholesale.
Diversification Opportunities for T-MOBILE and Costco Wholesale
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between T-MOBILE and Costco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE INCDL 00001 and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale 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 INCDL 00001 are associated (or correlated) with Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale has no effect on the direction of T-MOBILE i.e., T-MOBILE and Costco Wholesale go up and down completely randomly.
Pair Corralation between T-MOBILE and Costco Wholesale
Assuming the 90 days trading horizon T MOBILE INCDL 00001 is expected to generate 0.93 times more return on investment than Costco Wholesale. However, T MOBILE INCDL 00001 is 1.08 times less risky than Costco Wholesale. It trades about 0.14 of its potential returns per unit of risk. Costco Wholesale is currently generating about 0.07 per unit of risk. If you would invest 14,720 in T MOBILE INCDL 00001 on December 11, 2024 and sell it today you would earn a total of 9,755 from holding T MOBILE INCDL 00001 or generate 66.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.04% |
| Values | Daily Returns |
T MOBILE INCDL 00001 vs. Costco Wholesale
Performance |
| Timeline |
| T MOBILE INCDL |
| Costco Wholesale |
T-MOBILE and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T-MOBILE and Costco Wholesale
The main advantage of trading using opposite T-MOBILE and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T-MOBILE position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.| T-MOBILE vs. GRIFFIN MINING LTD | ||
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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