Correlation Between Simon Property and Macerich

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

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

Diversification Opportunities for Simon Property and Macerich

0.93

Correlation Coefficient

Simon Property  Macerich

Almost no diversification

The 3 months correlation between Simon and Macerich is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and The Macerich in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macerich and Simon Property 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 Simon Property Group 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 Simon Property i.e., Simon Property and Macerich go up and down completely randomly.

Pair Corralation between Simon Property and Macerich

Assuming the 90 days horizon Simon Property Group is expected to under-perform the Macerich. But the stock apears to be less risky and, when comparing its historical volatility, Simon Property Group is 1.62 times less risky than Macerich. The stock trades about -0.11 of its potential returns per unit of risk. The The Macerich is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,942  in The Macerich on September 27, 2024 and sell it today you would lose (19.00) from holding The Macerich or give up 0.98% of portfolio value over 90 days.

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

Simon Property Group  vs.  The Macerich

Simon Property Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Simon Property may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Macerich

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Macerich are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Macerich reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simon Property and Macerich

The main advantage of trading using opposite Simon Property and Macerich positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property 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 Simon Property Group and The Macerich 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.