Correlation Between Rheinmetall and T-Mobile

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

By analyzing existing cross correlation between Rheinmetall AG and T Mobile, you can compare the effects of market volatilities on Rheinmetall 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 Rheinmetall with a short position of T-Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and T-Mobile.

Diversification Opportunities for Rheinmetall and T-Mobile

-0.65

Correlation Coefficient

Rheinmetall  T-Mobile

Excellent diversification

The 3 months correlation between Rheinmetall and T-Mobile is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile and Rheinmetall 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 Rheinmetall AG 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 Rheinmetall i.e., Rheinmetall and T-Mobile go up and down completely randomly.

Pair Corralation between Rheinmetall and T-Mobile

Assuming the 90 days trading horizon Rheinmetall AG is expected to generate 1.46 times more return on investment than T-Mobile. However, Rheinmetall is 1.46 times more volatile than T Mobile. It trades about 0.16 of its potential returns per unit of risk. T Mobile is currently generating about -0.07 per unit of risk. If you would invest  130,787  in Rheinmetall AG on March 31, 2025 and sell it today you would earn a total of  46,013  from holding Rheinmetall AG or generate 35.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Rheinmetall AG  vs.  T Mobile

Rheinmetall AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rheinmetall AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Rheinmetall unveiled solid returns over the last few months and may actually be approaching a breakup point.

T Mobile

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Mobile has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Rheinmetall and T-Mobile

The main advantage of trading using opposite Rheinmetall and T-Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall 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.

The idea behind Rheinmetall AG and T Mobile 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.