Correlation Between Marathon Digital and Upstart Holdings

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

Diversification Opportunities for Marathon Digital and Upstart Holdings

0.52

Correlation Coefficient

Marathon Digital  Upstart Holdings

Very weak diversification

The 3 months correlation between Marathon and Upstart is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and Upstart Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upstart Holdings 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 Upstart Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upstart Holdings has no effect on the direction of Marathon Digital i.e., Marathon Digital and Upstart Holdings go up and down completely randomly.

Pair Corralation between Marathon Digital and Upstart Holdings

Given the investment horizon of 90 days Marathon Digital Holdings is expected to under-perform the Upstart Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Marathon Digital Holdings is 1.19 times less risky than Upstart Holdings. The stock trades about -0.12 of its potential returns per unit of risk. The Upstart Holdings is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  6,800  in Upstart Holdings on December 21, 2024 and sell it today you would lose (1,830) from holding Upstart Holdings or give up 26.91% of portfolio value over 90 days.

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

Marathon Digital Holdings  vs.  Upstart Holdings

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.

Upstart Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Upstart Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Upstart Holdings

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

The idea behind Marathon Digital Holdings and Upstart Holdings 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.