Correlation Between Macerich and Realty Income

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Can any of the company-specific risk be diversified away by investing in both Macerich and Realty Income 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 Realty Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macerich Company and Realty Income, you can compare the effects of market volatilities on Macerich and Realty Income 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 Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macerich and Realty Income.

Diversification Opportunities for Macerich and Realty Income

 0.45 Correlation Coefficient

Very weak diversification

The 3 months correlation between Macerich and Realty is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Macerich Company and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income 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 Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of Macerich i.e., Macerich and Realty Income go up and down completely randomly.

Pair Corralation between Macerich and Realty Income

Considering the 90-day investment horizon Macerich Company is expected to generate 2.22 times more return on investment than Realty Income. However, Macerich is 2.22 times more volatile than Realty Income. It trades about 0.08 of its potential returns per unit of risk. Realty Income is currently generating about 0.09 per unit of risk. If you would invest  1,070  in Macerich Company on June 20, 2024 and sell it today you would earn a total of  606.00  from holding Macerich Company or generate 56.64% return on investment over 90 days.
 Time Period 3 Months [change] Direction Moves Together Strength Weak Accuracy 100.0% Values Daily Returns

Macerich Company  vs.  Realty Income

 Performance
 Timeline
 Macerich Correlation Profile

7 of 100

 Weak Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Macerich Company are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Macerich exhibited solid returns over the last few months and may actually be approaching a breakup point.
 Performance Backtest Predict
 Realty Income Correlation Profile

26 of 100

 Weak Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Realty Income are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Realty Income displayed solid returns over the last few months and may actually be approaching a breakup point.
 Performance Backtest Predict

Macerich and Realty Income Volatility Contrast

 Predicted Return Density
 Returns

Pair Trading with Macerich and Realty Income

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