Correlation Between Citigroup and Tanger Factory

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

By analyzing existing cross correlation between Citigroup and Tanger Factory Outlet, you can compare the effects of market volatilities on Citigroup 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 Citigroup with a short position of Tanger Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Tanger Factory.

Diversification Opportunities for Citigroup and Tanger Factory

0.9

Correlation Coefficient

Citigroup  Tanger Factory

Almost no diversification

The 3 months correlation between Citigroup and Tanger is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup 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 Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and Tanger Factory go up and down completely randomly.

Pair Corralation between Citigroup and Tanger Factory

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.8 times more return on investment than Tanger Factory. However, Citigroup is 1.8 times more volatile than Tanger Factory Outlet. It trades about 0.27 of its potential returns per unit of risk. Tanger Factory Outlet is currently generating about 0.45 per unit of risk. If you would invest  6,315  in Citigroup on September 2, 2024 and sell it today you would earn a total of  772.00  from holding Citigroup or generate 12.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Tanger Factory Outlet

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tanger Factory Outlet

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tanger Factory Outlet are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Tanger Factory unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Tanger Factory

The main advantage of trading using opposite Citigroup and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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 Citigroup 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.