Correlation Between Marathon Digital and Lazard

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

Diversification Opportunities for Marathon Digital and Lazard

0.82

Correlation Coefficient

Marathon Digital  Lazard

Very poor diversification

The 3 months correlation between Marathon and Lazard is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and Lazard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard 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 Lazard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard has no effect on the direction of Marathon Digital i.e., Marathon Digital and Lazard go up and down completely randomly.

Pair Corralation between Marathon Digital and Lazard

Given the investment horizon of 90 days Marathon Digital Holdings is expected to generate 2.64 times more return on investment than Lazard. However, Marathon Digital is 2.64 times more volatile than Lazard. It trades about 0.18 of its potential returns per unit of risk. Lazard is currently generating about 0.13 per unit of risk. If you would invest  1,622  in Marathon Digital Holdings on August 31, 2024 and sell it today you would earn a total of  1,070  from holding Marathon Digital Holdings or generate 65.97% return on investment over 90 days.

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

Marathon Digital Holdings  vs.  Lazard

Marathon Digital Holdings

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Digital Holdings are ranked lower than 12 (%) 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.

Lazard

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Lazard showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marathon Digital and Lazard

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

The idea behind Marathon Digital Holdings and Lazard 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.