Correlation Between T MOBILE and Park Hotels

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

Diversification Opportunities for T MOBILE and Park Hotels

0.8

Correlation Coefficient

T MOBILE  Park Hotels

Very poor diversification

The 3 months correlation between TM5 and Park is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE INCDL 00001 and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of T MOBILE i.e., T MOBILE and Park Hotels go up and down completely randomly.

Pair Corralation between T MOBILE and Park Hotels

Assuming the 90 days trading horizon T MOBILE INCDL 00001 is expected to generate 0.66 times more return on investment than Park Hotels. However, T MOBILE INCDL 00001 is 1.52 times less risky than Park Hotels. It trades about 0.26 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.17 per unit of risk. If you would invest  18,117  in T MOBILE INCDL 00001 on September 12, 2024 and sell it today you would earn a total of  4,213  from holding T MOBILE INCDL 00001 or generate 23.25% return on investment over 90 days.

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

T MOBILE INCDL 00001  vs.  Park Hotels Resorts

T MOBILE INCDL

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE INCDL 00001 are ranked lower than 20 (%) 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.

Park Hotels Resorts

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with T MOBILE and Park Hotels

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

The idea behind T MOBILE INCDL 00001 and Park Hotels Resorts 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.