Correlation Between Ford and Macerich

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

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

Diversification Opportunities for Ford and Macerich

-0.11

Correlation Coefficient

Ford  Macerich

Good diversification

The 3 months correlation between Ford and Macerich is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and The Macerich in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macerich and Ford 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 Ford Motor 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 Ford i.e., Ford and Macerich go up and down completely randomly.

Pair Corralation between Ford and Macerich

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Macerich. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.09 times less risky than Macerich. The stock trades about -0.1 of its potential returns per unit of risk. The The Macerich is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,680  in The Macerich on September 27, 2024 and sell it today you would earn a total of  243.00  from holding The Macerich or generate 14.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Ford Motor  vs.  The Macerich

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Ford and Macerich

The main advantage of trading using opposite Ford and Macerich positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.