Correlation Between Marathon Digital and Affirm Holdings

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

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

Diversification Opportunities for Marathon Digital and Affirm Holdings

0.36

Correlation Coefficient

Marathon Digital  Affirm Holdings

Weak diversification

The 3 months correlation between Marathon and Affirm is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and Affirm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affirm Holdings and Marathon 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 Marathon Digital Holdings are associated (or correlated) with Affirm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affirm Holdings has no effect on the direction of Marathon Digital i.e., Marathon Digital and Affirm Holdings go up and down completely randomly.

Pair Corralation between Marathon Digital and Affirm Holdings

Given the investment horizon of 90 days Marathon Digital Holdings is expected to under-perform the Affirm Holdings. In addition to that, Marathon Digital is 1.0 times more volatile than Affirm Holdings. It trades about -0.13 of its total potential returns per unit of risk. Affirm Holdings is currently generating about -0.08 per unit of volatility. If you would invest  6,564  in Affirm Holdings on December 20, 2024 and sell it today you would lose (1,769) from holding Affirm Holdings or give up 26.95% of portfolio value over 90 days.

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

Marathon Digital Holdings  vs.  Affirm Holdings

Marathon Digital Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marathon Digital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Affirm Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Affirm Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Marathon Digital and Affirm Holdings

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

The idea behind Marathon Digital Holdings and Affirm 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.