Correlation Between Marathon Digital and Stifel Financial

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

Diversification Opportunities for Marathon Digital and Stifel Financial

0.84

Correlation Coefficient

Marathon Digital  Stifel Financial

Very poor diversification

The 3 months correlation between Marathon and Stifel is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and Stifel Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial 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 Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial has no effect on the direction of Marathon Digital i.e., Marathon Digital and Stifel Financial go up and down completely randomly.

Pair Corralation between Marathon Digital and Stifel Financial

Given the investment horizon of 90 days Marathon Digital Holdings is expected to generate 3.34 times more return on investment than Stifel Financial. However, Marathon Digital is 3.34 times more volatile than Stifel Financial. It trades about 0.15 of its potential returns per unit of risk. Stifel Financial is currently generating about 0.24 per unit of risk. If you would invest  1,488  in Marathon Digital Holdings on September 4, 2024 and sell it today you would earn a total of  1,075  from holding Marathon Digital Holdings or generate 72.24% 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.  Stifel Financial

Marathon Digital Holdings

Risk-Adjusted Performance

12 of 100

Good

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.

Stifel Financial

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stifel Financial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Stifel Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marathon Digital and Stifel Financial

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

The idea behind Marathon Digital Holdings and Stifel Financial 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.