Correlation Between Agree Realty and Tanger Factory

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

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

Diversification Opportunities for Agree Realty and Tanger Factory

0.62

Correlation Coefficient

Agree Realty  Tanger Factory

Poor diversification

The 3 months correlation between Agree and Tanger is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Agree Realty 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 Agree Realty 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 Agree Realty 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 Agree Realty i.e., Agree Realty and Tanger Factory go up and down completely randomly.

Pair Corralation between Agree Realty and Tanger Factory

Considering the 90-day investment horizon Agree Realty is expected to generate 4.03 times less return on investment than Tanger Factory. But when comparing it to its historical volatility, Agree Realty is 1.09 times less risky than Tanger Factory. It trades about 0.09 of its potential returns per unit of risk. Tanger Factory Outlet is currently generating about 0.32 of returns per unit of risk over similar time horizon. 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	Significant
Accuracy	98.44%
Values	Daily Returns

Agree Realty  vs.  Tanger Factory Outlet

Agree Realty

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agree Realty are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Agree Realty is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Agree Realty and Tanger Factory

The main advantage of trading using opposite Agree Realty and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agree Realty 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 Agree Realty 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.