Correlation Between STAG Industrial and Tanger Factory

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

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

Diversification Opportunities for STAG Industrial and Tanger Factory

0.29

Correlation Coefficient

STAG Industrial  Tanger Factory

Modest diversification

The 3 months correlation between STAG and Tanger is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding STAG Industrial 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 STAG Industrial 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 STAG Industrial 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 STAG Industrial i.e., STAG Industrial and Tanger Factory go up and down completely randomly.

Pair Corralation between STAG Industrial and Tanger Factory

Given the investment horizon of 90 days STAG Industrial is expected to generate 0.85 times more return on investment than Tanger Factory. However, STAG Industrial is 1.18 times less risky than Tanger Factory. It trades about 0.08 of its potential returns per unit of risk. Tanger Factory Outlet is currently generating about -0.02 per unit of risk. If you would invest  3,340  in STAG Industrial on December 28, 2024 and sell it today you would earn a total of  204.00  from holding STAG Industrial or generate 6.11% return on investment over 90 days.

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

STAG Industrial  vs.  Tanger Factory Outlet

STAG Industrial

Risk-Adjusted Performance

Modest

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

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 STAG Industrial and Tanger Factory

The main advantage of trading using opposite STAG Industrial and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STAG Industrial 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 STAG Industrial 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.