Correlation Between LPL Financial and Marathon Digital
Can any of the company-specific risk be diversified away by investing in both LPL Financial and Marathon Digital 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 LPL Financial and Marathon Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPL Financial Holdings and Marathon Digital Holdings, you can compare the effects of market volatilities on LPL Financial and Marathon Digital 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 LPL Financial with a short position of Marathon Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPL Financial and Marathon Digital.
Diversification Opportunities for LPL Financial and Marathon Digital
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LPL and Marathon is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding LPL Financial Holdings and Marathon Digital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Digital Holdings and LPL Financial 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 LPL Financial Holdings are associated (or correlated) with Marathon Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marathon Digital Holdings has no effect on the direction of LPL Financial i.e., LPL Financial and Marathon Digital go up and down completely randomly.
Pair Corralation between LPL Financial and Marathon Digital
Given the investment horizon of 90 days LPL Financial is expected to generate 2.13 times less return on investment than Marathon Digital. But when comparing it to its historical volatility, LPL Financial Holdings is 3.4 times less risky than Marathon Digital. It trades about 0.32 of its potential returns per unit of risk. Marathon Digital Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,894 in Marathon Digital Holdings on August 30, 2024 and sell it today you would earn a total of 798.00 from holding Marathon Digital Holdings or generate 42.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPL Financial Holdings vs. Marathon Digital Holdings
Performance |
| Timeline |
| LPL Financial Holdings |
| Marathon Digital Holdings |
LPL Financial and Marathon Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPL Financial and Marathon Digital
The main advantage of trading using opposite LPL Financial and Marathon Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPL Financial position performs unexpectedly, Marathon Digital 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 Marathon Digital will offset losses from the drop in Marathon Digital's long position.| LPL Financial vs. Tradeweb Markets | LPL Financial vs. Raymond James Financial | LPL Financial vs. PJT Partners | LPL Financial vs. Moelis Co |
| Marathon Digital vs. Hut 8 Corp | Marathon Digital vs. CleanSpark | Marathon Digital vs. Bit Digital | Marathon Digital vs. Bitfarms |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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