Correlation Between Marathon Digital and Iris Energy
Can any of the company-specific risk be diversified away by investing in both Marathon Digital and Iris Energy 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 Iris Energy 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 Iris Energy, you can compare the effects of market volatilities on Marathon Digital and Iris Energy 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 Iris Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Digital and Iris Energy.
Diversification Opportunities for Marathon Digital and Iris Energy
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Marathon and Iris is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy 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 Iris Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iris Energy has no effect on the direction of Marathon Digital i.e., Marathon Digital and Iris Energy go up and down completely randomly.
Pair Corralation between Marathon Digital and Iris Energy
Given the investment horizon of 90 days Marathon Digital is expected to generate 1.22 times less return on investment than Iris Energy. But when comparing it to its historical volatility, Marathon Digital Holdings is 1.1 times less risky than Iris Energy. It trades about 0.08 of its potential returns per unit of risk. Iris Energy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 141.00 in Iris Energy on August 28, 2024 and sell it today you would earn a total of 900.00 from holding Iris Energy or generate 638.3% 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. Iris Energy
Performance |
| Timeline |
| Marathon Digital Holdings |
| Iris Energy |
Marathon Digital and Iris Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Digital and Iris Energy
The main advantage of trading using opposite Marathon Digital and Iris Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Digital position performs unexpectedly, Iris Energy 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 Iris Energy will offset losses from the drop in Iris Energy's long position.| Marathon Digital vs. Hut 8 Corp | Marathon Digital vs. CleanSpark | Marathon Digital vs. Bit Digital | Marathon Digital vs. Bitfarms |
| Iris Energy vs. Old Dominion Freight | Iris Energy vs. Village Super Market | Iris Energy vs. Marfrig Global Foods | Iris Energy vs. FitLife Brands, Common |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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