Correlation Between Marathon Digital and DigiMax Global

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

Diversification Opportunities for Marathon Digital and DigiMax Global

-0.39

Correlation Coefficient

Marathon Digital  DigiMax Global

Very good diversification

The 3 months correlation between Marathon and DigiMax is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and DigiMax Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiMax Global 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 DigiMax Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiMax Global has no effect on the direction of Marathon Digital i.e., Marathon Digital and DigiMax Global go up and down completely randomly.

Pair Corralation between Marathon Digital and DigiMax Global

Given the investment horizon of 90 days Marathon Digital is expected to generate 29.57 times less return on investment than DigiMax Global. But when comparing it to its historical volatility, Marathon Digital Holdings is 14.87 times less risky than DigiMax Global. It trades about 0.07 of its potential returns per unit of risk. DigiMax Global is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2.01  in DigiMax Global on October 25, 2024 and sell it today you would earn a total of  19.99  from holding DigiMax Global or generate 994.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Marathon Digital Holdings  vs.  DigiMax Global

Marathon Digital Holdings

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Digital Holdings are ranked lower than 5 (%) 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.

DigiMax Global

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DigiMax Global are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DigiMax Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marathon Digital and DigiMax Global

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

The idea behind Marathon Digital Holdings and DigiMax Global 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.