Correlation Between Apple and Tanger Factory
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Tanger Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Tanger Factory Outlet, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Tanger Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Tanger Factory.
Diversification Opportunities for Apple and Tanger Factory
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Tanger is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Tanger Factory go up and down completely randomly.
Pair Corralation between Apple and Tanger Factory
Assuming the 90 days trading horizon Apple is expected to generate 1.52 times less return on investment than Tanger Factory. But when comparing it to its historical volatility, Apple Inc is 1.15 times less risky than Tanger Factory. It trades about 0.07 of its potential returns per unit of risk. Tanger Factory Outlet is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,636 in Tanger Factory Outlet on August 27, 2024 and sell it today you would earn a total of 1,865 from holding Tanger Factory Outlet or generate 114.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Tanger Factory Outlet
Performance |
| Timeline |
| Apple Inc |
| Tanger Factory Outlet |
Apple and Tanger Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Tanger Factory
The main advantage of trading using opposite Apple and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.The idea behind Apple Inc and Tanger Factory Outlet 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.| Tanger Factory vs. Lendlease Group | Tanger Factory vs. JAPAN TOBACCO UNSPADR12 | Tanger Factory vs. WILLIS LEASE FIN | Tanger Factory vs. ALGOMA STEEL GROUP |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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