Correlation Between Alphabet and Tanger Factory

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

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

Diversification Opportunities for Alphabet and Tanger Factory

0.76

Correlation Coefficient

Alphabet  Tanger Factory

Poor diversification

The 3 months correlation between Alphabet and Tanger is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C 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 Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Tanger Factory go up and down completely randomly.

Pair Corralation between Alphabet and Tanger Factory

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the Tanger Factory. In addition to that, Alphabet is 1.6 times more volatile than Tanger Factory Outlet. It trades about -0.02 of its total potential returns per unit of risk. Tanger Factory Outlet is currently generating about 0.45 per unit of volatility. If you would invest  3,319  in Tanger Factory Outlet on September 2, 2024 and sell it today you would earn a total of  378.00  from holding Tanger Factory Outlet or generate 11.39% return on investment over 90 days.

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

Alphabet Inc Class C  vs.  Tanger Factory Outlet

Alphabet Class C

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Alphabet and Tanger Factory

The main advantage of trading using opposite Alphabet and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class C 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.