Correlation Between Premier Foods and Tanger Factory
Can any of the company-specific risk be diversified away by investing in both Premier Foods 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 Premier Foods and Tanger Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Foods PLC and Tanger Factory Outlet, you can compare the effects of market volatilities on Premier Foods 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 Premier Foods with a short position of Tanger Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Tanger Factory.
Diversification Opportunities for Premier Foods and Tanger Factory
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Premier and Tanger is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC 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 Premier Foods 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 Premier Foods PLC 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 Premier Foods i.e., Premier Foods and Tanger Factory go up and down completely randomly.
Pair Corralation between Premier Foods and Tanger Factory
Assuming the 90 days trading horizon Premier Foods is expected to generate 5.34 times less return on investment than Tanger Factory. But when comparing it to its historical volatility, Premier Foods PLC is 1.89 times less risky than Tanger Factory. It trades about 0.06 of its potential returns per unit of risk. Tanger Factory Outlet is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,288 in Tanger Factory Outlet on November 28, 2024 and sell it today you would earn a total of 244.00 from holding Tanger Factory Outlet or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Foods PLC vs. Tanger Factory Outlet
Performance |
| Timeline |
| Premier Foods PLC |
| Tanger Factory Outlet |
Premier Foods and Tanger Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Tanger Factory
The main advantage of trading using opposite Premier Foods and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods 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.| Premier Foods vs. Lloyds Banking Group | Premier Foods vs. Creo Medical Group | Premier Foods vs. Zurich Insurance Group | Premier Foods vs. Liechtensteinische Landesbank AG |
| Tanger Factory vs. Sparebank 1 SR | Tanger Factory vs. St Galler Kantonalbank | Tanger Factory vs. SMA Solar Technology | Tanger Factory vs. Deutsche Pfandbriefbank AG |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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