Correlation Between Marathon Digital and Hut 8

Can any of the company-specific risk be diversified away by investing in both Marathon Digital and Hut 8 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 Hut 8 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 Hut 8 Corp, you can compare the effects of market volatilities on Marathon Digital and Hut 8 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 Hut 8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Digital and Hut 8.

Diversification Opportunities for Marathon Digital and Hut 8

0.93

Correlation Coefficient

Marathon Digital  Hut 8

Almost no diversification

The 3 months correlation between Marathon and Hut is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and Hut 8 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hut 8 Corp 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 Hut 8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hut 8 Corp has no effect on the direction of Marathon Digital i.e., Marathon Digital and Hut 8 go up and down completely randomly.

Pair Corralation between Marathon Digital and Hut 8

Given the investment horizon of 90 days Marathon Digital Holdings is expected to generate 0.93 times more return on investment than Hut 8. However, Marathon Digital Holdings is 1.08 times less risky than Hut 8. It trades about -0.04 of its potential returns per unit of risk. Hut 8 Corp is currently generating about -0.12 per unit of risk. If you would invest  1,729  in Marathon Digital Holdings on December 28, 2024 and sell it today you would lose (365.00) from holding Marathon Digital Holdings or give up 21.11% of portfolio value over 90 days.

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

Marathon Digital Holdings  vs.  Hut 8 Corp

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.

Hut 8 Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hut 8 Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Marathon Digital and Hut 8

The main advantage of trading using opposite Marathon Digital and Hut 8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Digital position performs unexpectedly, Hut 8 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 Hut 8 will offset losses from the drop in Hut 8's long position.

The idea behind Marathon Digital Holdings and Hut 8 Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.