Correlation Between Elme Communities and Tanger Factory

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

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

Diversification Opportunities for Elme Communities and Tanger Factory

-0.45

Correlation Coefficient

Elme Communities  Tanger Factory

Very good diversification

The 3 months correlation between Elme and Tanger is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Elme Communities 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 Elme Communities 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 Elme Communities 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 Elme Communities i.e., Elme Communities and Tanger Factory go up and down completely randomly.

Pair Corralation between Elme Communities and Tanger Factory

Given the investment horizon of 90 days Elme Communities is expected to generate 0.93 times more return on investment than Tanger Factory. However, Elme Communities is 1.08 times less risky than Tanger Factory. It trades about -0.11 of its potential returns per unit of risk. Tanger Factory Outlet is currently generating about -0.12 per unit of risk. If you would invest  1,575  in Elme Communities on March 12, 2024 and sell it today you would lose (48.00) from holding Elme Communities or give up 3.05% of portfolio value over 90 days.

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

Elme Communities  vs.  Tanger Factory Outlet

Elme Communities

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elme Communities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Elme Communities exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tanger Factory Outlet

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's forward-looking signals remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Elme Communities and Tanger Factory

The main advantage of trading using opposite Elme Communities and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elme Communities 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 Elme Communities 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.