Correlation Between Marathon Digital and BIG Blockchain

Can any of the company-specific risk be diversified away by investing in both Marathon Digital and BIG Blockchain 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 BIG Blockchain 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 BIG Blockchain Intelligence, you can compare the effects of market volatilities on Marathon Digital and BIG Blockchain 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 BIG Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Digital and BIG Blockchain.

Diversification Opportunities for Marathon Digital and BIG Blockchain

0.66

Correlation Coefficient

Marathon Digital  BIG Blockchain

Poor diversification

The 3 months correlation between Marathon and BIG is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and BIG Blockchain Intelligence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIG Blockchain Intel 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 BIG Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIG Blockchain Intel has no effect on the direction of Marathon Digital i.e., Marathon Digital and BIG Blockchain go up and down completely randomly.

Pair Corralation between Marathon Digital and BIG Blockchain

Given the investment horizon of 90 days Marathon Digital Holdings is expected to generate 1.0 times more return on investment than BIG Blockchain. However, Marathon Digital is 1.0 times more volatile than BIG Blockchain Intelligence. It trades about 0.06 of its potential returns per unit of risk. BIG Blockchain Intelligence is currently generating about 0.01 per unit of risk. If you would invest  734.00  in Marathon Digital Holdings on October 10, 2024 and sell it today you would earn a total of  1,224  from holding Marathon Digital Holdings or generate 166.76% return on investment over 90 days.

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

Marathon Digital Holdings  vs.  BIG Blockchain Intelligence

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.

BIG Blockchain Intel

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BIG Blockchain Intelligence are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, BIG Blockchain reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marathon Digital and BIG Blockchain

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

The idea behind Marathon Digital Holdings and BIG Blockchain Intelligence 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.