Correlation Between Apple and T MOBILE

Can any of the company-specific risk be diversified away by investing in both Apple and T MOBILE 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 Apple and T MOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and T MOBILE US, you can compare the effects of market volatilities on Apple and T MOBILE 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 Apple with a short position of T MOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and T MOBILE.

Diversification Opportunities for Apple and T MOBILE

0.8

Correlation Coefficient

Apple  T MOBILE

Very poor diversification

The 3 months correlation between Apple and TM5 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and T MOBILE US in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T MOBILE US and Apple 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 Apple Inc are associated (or correlated) with T MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T MOBILE US has no effect on the direction of Apple i.e., Apple and T MOBILE go up and down completely randomly.

Pair Corralation between Apple and T MOBILE

Assuming the 90 days trading horizon Apple Inc is expected to generate 1.19 times more return on investment than T MOBILE. However, Apple is 1.19 times more volatile than T MOBILE US. It trades about 0.1 of its potential returns per unit of risk. T MOBILE US is currently generating about 0.09 per unit of risk. If you would invest  12,116  in Apple Inc on September 14, 2024 and sell it today you would earn a total of  11,504  from holding Apple Inc or generate 94.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  T MOBILE US

Apple Inc

Risk-Adjusted Performance

18 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

T MOBILE US

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE US are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, T MOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and T MOBILE

The main advantage of trading using opposite Apple and T MOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, T MOBILE 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 T MOBILE will offset losses from the drop in T MOBILE's long position.

The idea behind Apple Inc and T MOBILE US 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.