Correlation Between T MOBILE and MYFAIR GOLD

Can any of the company-specific risk be diversified away by investing in both T MOBILE and MYFAIR GOLD 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 MYFAIR GOLD 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 MYFAIR GOLD P, you can compare the effects of market volatilities on T MOBILE and MYFAIR GOLD 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 MYFAIR GOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of T MOBILE and MYFAIR GOLD.

Diversification Opportunities for T MOBILE and MYFAIR GOLD

0.35

Correlation Coefficient

T MOBILE  MYFAIR GOLD

Weak diversification

The 3 months correlation between TM5 and MYFAIR is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and MYFAIR GOLD P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYFAIR GOLD P 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 MYFAIR GOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYFAIR GOLD P has no effect on the direction of T MOBILE i.e., T MOBILE and MYFAIR GOLD go up and down completely randomly.

Pair Corralation between T MOBILE and MYFAIR GOLD

Assuming the 90 days trading horizon T MOBILE US is expected to generate 0.36 times more return on investment than MYFAIR GOLD. However, T MOBILE US is 2.77 times less risky than MYFAIR GOLD. It trades about 0.29 of its potential returns per unit of risk. MYFAIR GOLD P is currently generating about 0.06 per unit of risk. If you would invest  18,046  in T MOBILE US on September 3, 2024 and sell it today you would earn a total of  5,444  from holding T MOBILE US or generate 30.17% return on investment over 90 days.

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

T MOBILE US  vs.  MYFAIR GOLD P

T MOBILE US

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE US are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, T MOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

MYFAIR GOLD P

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MYFAIR GOLD P are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MYFAIR GOLD reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T MOBILE and MYFAIR GOLD

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

The idea behind T MOBILE US and MYFAIR GOLD P 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 Commodity Directory module to find actively traded commodities issued by global exchanges.