Correlation Between W P and Tanger Factory
Can any of the company-specific risk be diversified away by investing in both W P 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 W P and Tanger Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between W P Carey and Tanger Factory Outlet, you can compare the effects of market volatilities on W P 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 W P with a short position of Tanger Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of W P and Tanger Factory.
Diversification Opportunities for W P and Tanger Factory
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WPC and Tanger is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding W P Carey 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 W P 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 W P Carey 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 W P i.e., W P and Tanger Factory go up and down completely randomly.
Pair Corralation between W P and Tanger Factory
Considering the 90-day investment horizon W P is expected to generate 3.08 times less return on investment than Tanger Factory. But when comparing it to its historical volatility, W P Carey is 1.24 times less risky than Tanger Factory. It trades about 0.18 of its potential returns per unit of risk. Tanger Factory Outlet is currently generating about 0.45 of returns per unit of risk over similar time horizon. 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 Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
W P Carey vs. Tanger Factory Outlet
Performance |
Timeline |
W P Carey |
Tanger Factory Outlet |
W P and Tanger Factory Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with W P and Tanger Factory
The main advantage of trading using opposite W P and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if W P 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.W P vs. STAG Industrial | W P vs. National Retail Properties | W P vs. Medical Properties Trust | W P vs. Omega Healthcare Investors |
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Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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