Correlation Between Marathon Digital and LPL Financial
Can any of the company-specific risk be diversified away by investing in both Marathon Digital and LPL 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 LPL 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 LPL Financial Holdings, you can compare the effects of market volatilities on Marathon Digital and LPL 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 LPL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Digital and LPL Financial.
Diversification Opportunities for Marathon Digital and LPL Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Marathon and LPL is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and LPL Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPL Financial 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 LPL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPL Financial Holdings has no effect on the direction of Marathon Digital i.e., Marathon Digital and LPL Financial go up and down completely randomly.
Pair Corralation between Marathon Digital and LPL Financial
Given the investment horizon of 90 days Marathon Digital Holdings is expected to generate 3.23 times more return on investment than LPL Financial. However, Marathon Digital is 3.23 times more volatile than LPL Financial Holdings. It trades about 0.14 of its potential returns per unit of risk. LPL Financial Holdings is currently generating about 0.28 per unit of risk. If you would invest 1,670 in Marathon Digital Holdings on August 30, 2024 and sell it today you would earn a total of 1,022 from holding Marathon Digital Holdings or generate 61.2% 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. LPL Financial Holdings
Performance |
| Timeline |
| Marathon Digital Holdings |
| LPL Financial Holdings |
Marathon Digital and LPL Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Digital and LPL Financial
The main advantage of trading using opposite Marathon Digital and LPL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Digital position performs unexpectedly, LPL 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 LPL Financial will offset losses from the drop in LPL Financial's long position.| Marathon Digital vs. Hut 8 Corp | Marathon Digital vs. CleanSpark | Marathon Digital vs. Bit Digital | Marathon Digital vs. Bitfarms |
| LPL Financial vs. Tradeweb Markets | LPL Financial vs. Raymond James Financial | LPL Financial vs. PJT Partners | LPL Financial vs. Moelis Co |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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