Correlation Between Simon Property and Tanger Factory

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

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

Diversification Opportunities for Simon Property and Tanger Factory

0.61

Correlation Coefficient

Simon Property  Tanger Factory

Poor diversification

The 3 months correlation between Simon and Tanger is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group 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 Simon Property 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 Simon Property Group 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 Simon Property i.e., Simon Property and Tanger Factory go up and down completely randomly.

Pair Corralation between Simon Property and Tanger Factory

Considering the 90-day investment horizon Simon Property Group is expected to generate 0.98 times more return on investment than Tanger Factory. However, Simon Property Group is 1.02 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 -0.04 per unit of risk. If you would invest  17,930  in Simon Property Group on December 1, 2024 and sell it today you would earn a total of  679.00  from holding Simon Property Group or generate 3.79% return on investment over 90 days.

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

Simon Property Group  vs.  Tanger Factory Outlet

Simon Property Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Simon Property is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Tanger Factory Outlet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tanger Factory Outlet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Tanger Factory is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Simon Property and Tanger Factory

The main advantage of trading using opposite Simon Property and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property 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 Simon Property Group 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.