Correlation Between Marathon Digital and NextTrip

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

Diversification Opportunities for Marathon Digital and NextTrip

0.83

Correlation Coefficient

Marathon Digital  NextTrip

Very poor diversification

The 3 months correlation between Marathon and NextTrip is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and NextTrip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextTrip 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 NextTrip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextTrip has no effect on the direction of Marathon Digital i.e., Marathon Digital and NextTrip go up and down completely randomly.

Pair Corralation between Marathon Digital and NextTrip

Given the investment horizon of 90 days Marathon Digital Holdings is expected to under-perform the NextTrip. But the stock apears to be less risky and, when comparing its historical volatility, Marathon Digital Holdings is 1.4 times less risky than NextTrip. The stock trades about -0.07 of its potential returns per unit of risk. The NextTrip is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  632.00  in NextTrip on December 30, 2024 and sell it today you would lose (79.00) from holding NextTrip or give up 12.5% of portfolio value over 90 days.

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

Marathon Digital Holdings  vs.  NextTrip

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.

NextTrip

Risk-Adjusted Performance

Very Weak

Over the last 90 days NextTrip has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, NextTrip is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Marathon Digital and NextTrip

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

The idea behind Marathon Digital Holdings and NextTrip 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.