Correlation Between Systemair and Tanger Factory
Can any of the company-specific risk be diversified away by investing in both Systemair and Tanger Factory 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 Systemair and Tanger Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Systemair AB and Tanger Factory Outlet, you can compare the effects of market volatilities on Systemair and Tanger Factory 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 Systemair with a short position of Tanger Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Systemair and Tanger Factory.
Diversification Opportunities for Systemair and Tanger Factory
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Systemair and Tanger is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Systemair AB and Tanger Factory Outlet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tanger Factory Outlet and Systemair 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 Systemair AB are associated (or correlated) with Tanger Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tanger Factory Outlet has no effect on the direction of Systemair i.e., Systemair and Tanger Factory go up and down completely randomly.
Pair Corralation between Systemair and Tanger Factory
Assuming the 90 days trading horizon Systemair AB is expected to generate 1.63 times more return on investment than Tanger Factory. However, Systemair is 1.63 times more volatile than Tanger Factory Outlet. It trades about 0.29 of its potential returns per unit of risk. Tanger Factory Outlet is currently generating about 0.35 per unit of risk. If you would invest 8,180 in Systemair AB on September 5, 2024 and sell it today you would earn a total of 1,080 from holding Systemair AB or generate 13.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Systemair AB vs. Tanger Factory Outlet
Performance |
| Timeline |
| Systemair AB |
| Tanger Factory Outlet |
Systemair and Tanger Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Systemair and Tanger Factory
The main advantage of trading using opposite Systemair and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Systemair position performs unexpectedly, Tanger Factory 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 Tanger Factory will offset losses from the drop in Tanger Factory's long position.| Systemair vs. Samsung Electronics Co | Systemair vs. Samsung Electronics Co | Systemair vs. Hyundai Motor | Systemair vs. Toyota Motor Corp |
| Tanger Factory vs. Naked Wines plc | Tanger Factory vs. Made Tech Group | Tanger Factory vs. Uber Technologies | Tanger Factory vs. Datalogic |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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