Correlation Between First Industrial and Tanger Factory

Can any of the company-specific risk be diversified away by investing in both First 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 First 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 First Industrial Realty and Tanger Factory Outlet, you can compare the effects of market volatilities on First 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 First Industrial with a short position of Tanger Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Tanger Factory.

Diversification Opportunities for First Industrial and Tanger Factory

0.71

Correlation Coefficient

First Industrial  Tanger Factory

Poor diversification

The 3 months correlation between First and Tanger is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial 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 First 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 First Industrial 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 First Industrial i.e., First Industrial and Tanger Factory go up and down completely randomly.

Pair Corralation between First Industrial and Tanger Factory

Allowing for the 90-day total investment horizon First Industrial Realty is expected to generate 0.92 times more return on investment than Tanger Factory. However, First Industrial Realty is 1.09 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 -0.09 per unit of risk. If you would invest  5,655  in First Industrial Realty on March 1, 2025 and sell it today you would lose (682.00) from holding First Industrial Realty or give up 12.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

First Industrial Realty  vs.  Tanger Factory Outlet

First Industrial Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Industrial Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

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 fragile performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with First Industrial and Tanger Factory

The main advantage of trading using opposite First Industrial and Tanger Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First 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 First Industrial 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.