Correlation Between Marathon Digital and Netcapital

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

Diversification Opportunities for Marathon Digital and Netcapital

0.17

Correlation Coefficient

Marathon Digital  Netcapital

Average diversification

The 3 months correlation between Marathon and Netcapital is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and Netcapital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcapital 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 Netcapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcapital has no effect on the direction of Marathon Digital i.e., Marathon Digital and Netcapital go up and down completely randomly.

Pair Corralation between Marathon Digital and Netcapital

Given the investment horizon of 90 days Marathon Digital Holdings is expected to under-perform the Netcapital. In addition to that, Marathon Digital is 1.43 times more volatile than Netcapital. It trades about -0.07 of its total potential returns per unit of risk. Netcapital is currently generating about -0.07 per unit of volatility. If you would invest  212.00  in Netcapital on December 30, 2024 and sell it today you would lose (40.00) from holding Netcapital or give up 18.87% of portfolio value over 90 days.

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

Marathon Digital Holdings  vs.  Netcapital

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.

Netcapital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Netcapital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Marathon Digital and Netcapital

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

The idea behind Marathon Digital Holdings and Netcapital 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.