An optical device may include a waveguide-based Mach-Zehnder (MZ) interferometer associated with performing polarization multiplexing or demultiplexing. The waveguide-based MZ interferomenter may include a first MZ arm, a second MZ arm, and a set of stress-balancing trenches. A portion of the first MZ arm may be between at least two stress-reducing trenches of a plurality of stress-reducing trenches. The plurality of stress-reducing trenches may be in a cladding layer on a substrate. The set of stress-balancing trenches may be on an opposite side of the second MZ arm from the plurality of stress-reducing trenches. The set of stress-balancing trenches may be in the cladding layer on the substrate.