Correlation Between Alexander Baldwin and Macerich

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

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

Diversification Opportunities for Alexander Baldwin and Macerich

0.3

Correlation Coefficient

Alexander Baldwin  Macerich

Weak diversification

The 3 months correlation between Alexander and Macerich is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Alexander Baldwin Holdings and Macerich Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macerich and Alexander Baldwin 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 Alexander Baldwin Holdings 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 Alexander Baldwin i.e., Alexander Baldwin and Macerich go up and down completely randomly.

Pair Corralation between Alexander Baldwin and Macerich

Given the investment horizon of 90 days Alexander Baldwin Holdings is expected to under-perform the Macerich. But the stock apears to be less risky and, when comparing its historical volatility, Alexander Baldwin Holdings is 1.62 times less risky than Macerich. The stock trades about -0.01 of its potential returns per unit of risk. The Macerich Company is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,609  in Macerich Company on September 12, 2024 and sell it today you would earn a total of  524.00  from holding Macerich Company or generate 32.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Alexander Baldwin Holdings  vs.  Macerich Company

Alexander Baldwin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexander Baldwin Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Alexander Baldwin is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Macerich

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Macerich Company are ranked lower than 22 (%) 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.

Pair Trading with Alexander Baldwin and Macerich

The main advantage of trading using opposite Alexander Baldwin and Macerich positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alexander Baldwin 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 Alexander Baldwin Holdings 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.