Correlation Between Tanger Factory and Regency Centers

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

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

Diversification Opportunities for Tanger Factory and Regency Centers

0.41

Correlation Coefficient

Tanger Factory  Regency Centers

Very weak diversification

The 3 months correlation between Tanger and Regency is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Tanger Factory Outlet and Regency Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regency Centers and Tanger Factory 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 Tanger Factory Outlet are associated (or correlated) with Regency Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regency Centers has no effect on the direction of Tanger Factory i.e., Tanger Factory and Regency Centers go up and down completely randomly.

Pair Corralation between Tanger Factory and Regency Centers

Considering the 90-day investment horizon Tanger Factory Outlet is expected to generate 1.14 times more return on investment than Regency Centers. However, Tanger Factory is 1.14 times more volatile than Regency Centers. It trades about 0.32 of its potential returns per unit of risk. Regency Centers is currently generating about 0.09 per unit of risk. If you would invest  2,998  in Tanger Factory Outlet on August 31, 2024 and sell it today you would earn a total of  712.00  from holding Tanger Factory Outlet or generate 23.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Tanger Factory Outlet  vs.  Regency Centers

Tanger Factory Outlet

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tanger Factory Outlet are ranked lower than 25 (%) 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.

Regency Centers

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Regency Centers are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Regency Centers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Tanger Factory and Regency Centers

The main advantage of trading using opposite Tanger Factory and Regency Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tanger Factory position performs unexpectedly, Regency Centers 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 Regency Centers will offset losses from the drop in Regency Centers' long position.

The idea behind Tanger Factory Outlet and Regency Centers 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.