Correlation Between Inventrust Properties and Tanger Factory
Can any of the company-specific risk be diversified away by investing in both Inventrust Properties 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 Inventrust Properties and Tanger Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inventrust Properties Corp and Tanger Factory Outlet, you can compare the effects of market volatilities on Inventrust Properties 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 Inventrust Properties with a short position of Tanger Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inventrust Properties and Tanger Factory.
Diversification Opportunities for Inventrust Properties and Tanger Factory
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Inventrust and Tanger is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Inventrust Properties Corp 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 Inventrust Properties 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 Inventrust Properties Corp 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 Inventrust Properties i.e., Inventrust Properties and Tanger Factory go up and down completely randomly.
Pair Corralation between Inventrust Properties and Tanger Factory
Considering the 90-day investment horizon Inventrust Properties is expected to generate 2.32 times less return on investment than Tanger Factory. But when comparing it to its historical volatility, Inventrust Properties Corp is 1.11 times less risky than Tanger Factory. It trades about 0.05 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 1,738 in Tanger Factory Outlet on August 26, 2024 and sell it today you would earn a total of 1,911 from holding Tanger Factory Outlet or generate 109.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inventrust Properties Corp vs. Tanger Factory Outlet
Performance |
| Timeline |
| Inventrust Properties |
| Tanger Factory Outlet |
Inventrust Properties and Tanger Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inventrust Properties and Tanger Factory
The main advantage of trading using opposite Inventrust Properties and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inventrust Properties 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 Inventrust Properties Corp 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.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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