Correlation Between Macerich and Wheeler Real

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

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

Diversification Opportunities for Macerich and Wheeler Real

0.51

Correlation Coefficient

Macerich  Wheeler Real

Very weak diversification

The 3 months correlation between Macerich and Wheeler is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Macerich Company and Wheeler Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheeler Real Estate 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 Wheeler Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheeler Real Estate has no effect on the direction of Macerich i.e., Macerich and Wheeler Real go up and down completely randomly.

Pair Corralation between Macerich and Wheeler Real

Considering the 90-day investment horizon Macerich Company is expected to generate 0.41 times more return on investment than Wheeler Real. However, Macerich Company is 2.41 times less risky than Wheeler Real. It trades about -0.03 of its potential returns per unit of risk. Wheeler Real Estate is currently generating about -0.14 per unit of risk. If you would invest  1,652  in Macerich Company on March 4, 2024 and sell it today you would lose (140.00) from holding Macerich Company or give up 8.47% of portfolio value over 90 days.

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

Macerich Company  vs.  Wheeler Real Estate

Macerich

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macerich Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Macerich is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Wheeler Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wheeler Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Macerich and Wheeler Real

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

The idea behind Macerich Company and Wheeler Real Estate 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.