Correlation Between Macerich and Alexander Baldwin

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

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

Diversification Opportunities for Macerich and Alexander Baldwin

0.13

Correlation Coefficient

Macerich  Alexander Baldwin

Average diversification

The 3 months correlation between Macerich and Alexander is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Macerich Company and Alexander Baldwin Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexander Baldwin 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 Alexander Baldwin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexander Baldwin has no effect on the direction of Macerich i.e., Macerich and Alexander Baldwin go up and down completely randomly.

Pair Corralation between Macerich and Alexander Baldwin

Considering the 90-day investment horizon Macerich Company is expected to generate 1.66 times more return on investment than Alexander Baldwin. However, Macerich is 1.66 times more volatile than Alexander Baldwin Holdings. It trades about 0.31 of its potential returns per unit of risk. Alexander Baldwin Holdings is currently generating about 0.04 per unit of risk. If you would invest  1,533  in Macerich Company on September 4, 2024 and sell it today you would earn a total of  554.00  from holding Macerich Company or generate 36.14% return on investment over 90 days.

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

Macerich Company  vs.  Alexander Baldwin Holdings

Macerich

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Macerich Company are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Macerich exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alexander Baldwin

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alexander Baldwin Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Macerich and Alexander Baldwin

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

The idea behind Macerich Company and Alexander Baldwin Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.