Correlation Between Federal Realty and Macerich

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

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

Diversification Opportunities for Federal Realty and Macerich

0.87

Correlation Coefficient

Federal Realty  Macerich

Very poor diversification

The 3 months correlation between Federal and Macerich is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Macerich Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macerich and Federal 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 Federal Realty Investment are associated (or correlated) with Macerich. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macerich has no effect on the direction of Federal Realty i.e., Federal Realty and Macerich go up and down completely randomly.

Pair Corralation between Federal Realty and Macerich

Considering the 90-day investment horizon Federal Realty Investment is expected to generate 0.66 times more return on investment than Macerich. However, Federal Realty Investment is 1.51 times less risky than Macerich. It trades about -0.13 of its potential returns per unit of risk. Macerich Company is currently generating about -0.09 per unit of risk. If you would invest  10,983  in Federal Realty Investment on December 29, 2024 and sell it today you would lose (1,290) from holding Federal Realty Investment or give up 11.75% of portfolio value over 90 days.

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

Federal Realty Investment  vs.  Macerich Company

Federal Realty Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federal Realty Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Macerich

Risk-Adjusted Performance

Very Weak

Over the last 90 days Macerich Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Federal Realty and Macerich

The main advantage of trading using opposite Federal Realty and Macerich positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Macerich 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 Macerich will offset losses from the drop in Macerich's long position.

The idea behind Federal Realty Investment and Macerich Company 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.