Correlation Between Galaxy Digital and Marathon Digital

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

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

Diversification Opportunities for Galaxy Digital and Marathon Digital

0.72

Correlation Coefficient

Galaxy Digital  Marathon Digital

Poor diversification

The 3 months correlation between Galaxy and Marathon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Digital Holdings and Marathon Digital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Digital Holdings and Galaxy Digital 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 Galaxy Digital Holdings are associated (or correlated) with Marathon Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marathon Digital Holdings has no effect on the direction of Galaxy Digital i.e., Galaxy Digital and Marathon Digital go up and down completely randomly.

Pair Corralation between Galaxy Digital and Marathon Digital

Assuming the 90 days horizon Galaxy Digital Holdings is expected to generate 0.75 times more return on investment than Marathon Digital. However, Galaxy Digital Holdings is 1.33 times less risky than Marathon Digital. It trades about 0.09 of its potential returns per unit of risk. Marathon Digital Holdings is currently generating about 0.06 per unit of risk. If you would invest  383.00  in Galaxy Digital Holdings on October 10, 2024 and sell it today you would earn a total of  1,584  from holding Galaxy Digital Holdings or generate 413.58% return on investment over 90 days.

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

Galaxy Digital Holdings  vs.  Marathon Digital Holdings

Galaxy Digital Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Digital Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Galaxy Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Marathon Digital Holdings

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Digital Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Marathon Digital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Galaxy Digital and Marathon Digital

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

The idea behind Galaxy Digital Holdings and Marathon Digital 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.