Correlation Between Macerich and Federal Realty
Can any of the company-specific risk be diversified away by investing in both Macerich and Federal Realty 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 Macerich and Federal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macerich Company and Federal Realty Investment, you can compare the effects of market volatilities on Macerich and Federal Realty 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 Macerich with a short position of Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macerich and Federal Realty.
Diversification Opportunities for Macerich and Federal Realty
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Macerich and Federal is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Macerich Company and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment and Macerich 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 Macerich Company are associated (or correlated) with Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of Macerich i.e., Macerich and Federal Realty go up and down completely randomly.
Pair Corralation between Macerich and Federal Realty
Considering the 90-day investment horizon Macerich Company is expected to generate 2.82 times more return on investment than Federal Realty. However, Macerich is 2.82 times more volatile than Federal Realty Investment. It trades about 0.23 of its potential returns per unit of risk. Federal Realty Investment is currently generating about -0.17 per unit of risk. If you would invest 1,779 in Macerich Company on August 28, 2024 and sell it today you would earn a total of 314.00 from holding Macerich Company or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macerich Company vs. Federal Realty Investment
Performance |
| Timeline |
| Macerich |
| Federal Realty Investment |
Macerich and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macerich and Federal Realty
The main advantage of trading using opposite Macerich and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macerich position performs unexpectedly, Federal Realty 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 Federal Realty will offset losses from the drop in Federal Realty's long position.| Macerich vs. Kimco Realty | Macerich vs. Regency Centers | Macerich vs. Site Centers Corp | Macerich vs. Federal Realty Investment |
| Federal Realty vs. Saul Centers | Federal Realty vs. Wheeler Real Estate | Federal Realty vs. Macerich Company | Federal Realty vs. Simon Property Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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