Correlation Between Exxon and T Mobile
Can any of the company-specific risk be diversified away by investing in both Exxon 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 Exxon and T Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil Corp and T Mobile, you can compare the effects of market volatilities on Exxon 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 Exxon with a short position of T Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and T Mobile.
Diversification Opportunities for Exxon and T Mobile
Very good diversification
The 3 months correlation between Exxon and TMUS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and Exxon 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 Exxon Mobil Corp 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 has no effect on the direction of Exxon i.e., Exxon and T Mobile go up and down completely randomly.
Pair Corralation between Exxon and T Mobile
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 1.73 times more return on investment than T Mobile. However, Exxon is 1.73 times more volatile than T Mobile. It trades about 0.31 of its potential returns per unit of risk. T Mobile is currently generating about 0.13 per unit of risk. If you would invest 11,465 in Exxon Mobil Corp on January 25, 2024 and sell it today you would earn a total of 640.00 from holding Exxon Mobil Corp or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. T Mobile
Performance |
| Timeline |
| Exxon Mobil Corp |
| T Mobile |
Exxon and T Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and T Mobile
The main advantage of trading using opposite Exxon and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
| T Mobile vs. ATT Inc | T Mobile vs. Comcast Corp | T Mobile vs. Lumen Technologies | T Mobile vs. Verizon Communications |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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