Correlation Between T Mobile and Mueller Industries

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

By analyzing existing cross correlation between T Mobile and Mueller Industries, you can compare the effects of market volatilities on T Mobile and Mueller Industries 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 Mueller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Mobile and Mueller Industries.

Diversification Opportunities for T Mobile and Mueller Industries

0.74

Correlation Coefficient

T Mobile  Mueller Industries

Poor diversification

The 3 months correlation between TM5 and Mueller is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Mueller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mueller Industries 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 are associated (or correlated) with Mueller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mueller Industries has no effect on the direction of T Mobile i.e., T Mobile and Mueller Industries go up and down completely randomly.

Pair Corralation between T Mobile and Mueller Industries

Assuming the 90 days horizon T Mobile is expected to under-perform the Mueller Industries. But the stock apears to be less risky and, when comparing its historical volatility, T Mobile is 1.39 times less risky than Mueller Industries. The stock trades about -0.18 of its potential returns per unit of risk. The Mueller Industries is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  8,178  in Mueller Industries on September 25, 2024 and sell it today you would lose (628.00) from holding Mueller Industries or give up 7.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

T Mobile  vs.  Mueller Industries

T Mobile

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, T Mobile reported solid returns over the last few months and may actually be approaching a breakup point.

Mueller Industries

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mueller Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mueller Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T Mobile and Mueller Industries

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

The idea behind T Mobile and Mueller Industries 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.