Correlation Between T Mobile and Liberty Broadband

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

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

Diversification Opportunities for T Mobile and Liberty Broadband

0.7

Correlation Coefficient

T Mobile  Liberty Broadband

Poor diversification

The 3 months correlation between TMUS and Liberty is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Liberty Broadband Srs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband Srs 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 Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband Srs has no effect on the direction of T Mobile i.e., T Mobile and Liberty Broadband go up and down completely randomly.

Pair Corralation between T Mobile and Liberty Broadband

Given the investment horizon of 90 days T Mobile is expected to generate 0.74 times more return on investment than Liberty Broadband. However, T Mobile is 1.36 times less risky than Liberty Broadband. It trades about -0.21 of its potential returns per unit of risk. Liberty Broadband Srs is currently generating about -0.18 per unit of risk. If you would invest  23,908  in T Mobile on September 24, 2024 and sell it today you would lose (1,877) from holding T Mobile or give up 7.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

T Mobile  vs.  Liberty Broadband Srs

T Mobile

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, T Mobile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Liberty Broadband Srs

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Broadband Srs are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Liberty Broadband is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with T Mobile and Liberty Broadband

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

The idea behind T Mobile and Liberty Broadband Srs 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.