Correlation Between Capital Counties and Tanger Factory

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

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

Diversification Opportunities for Capital Counties and Tanger Factory

-0.82

Correlation Coefficient

Capital Counties  Tanger Factory

Pay attention - limited upside

The 3 months correlation between Capital and Tanger is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Capital Counties Properties 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 Capital Counties 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 Capital Counties Properties 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 Capital Counties i.e., Capital Counties and Tanger Factory go up and down completely randomly.

Pair Corralation between Capital Counties and Tanger Factory

Assuming the 90 days horizon Capital Counties Properties is expected to under-perform the Tanger Factory. In addition to that, Capital Counties is 1.22 times more volatile than Tanger Factory Outlet. It trades about -0.06 of its total potential returns per unit of risk. Tanger Factory Outlet is currently generating about 0.33 per unit of volatility. If you would invest  2,668  in Tanger Factory Outlet on September 2, 2024 and sell it today you would earn a total of  815.00  from holding Tanger Factory Outlet or generate 30.55% return on investment over 90 days.

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

Capital Counties Properties  vs.  Tanger Factory Outlet

Capital Counties Pro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Counties Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Capital Counties 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

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. Despite nearly uncertain basic indicators, Tanger Factory reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital Counties and Tanger Factory

The main advantage of trading using opposite Capital Counties and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Counties 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 Capital Counties Properties 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.