Correlation Between Marathon Digital and MicroStrategy Incorporated
Can any of the company-specific risk be diversified away by investing in both Marathon Digital and MicroStrategy Incorporated 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 MicroStrategy Incorporated 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 MicroStrategy Incorporated, you can compare the effects of market volatilities on Marathon Digital and MicroStrategy Incorporated 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 MicroStrategy Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Digital and MicroStrategy Incorporated.
Diversification Opportunities for Marathon Digital and MicroStrategy Incorporated
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Marathon and MicroStrategy is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and MicroStrategy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroStrategy Incorporated 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 MicroStrategy Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroStrategy Incorporated has no effect on the direction of Marathon Digital i.e., Marathon Digital and MicroStrategy Incorporated go up and down completely randomly.
Pair Corralation between Marathon Digital and MicroStrategy Incorporated
Given the investment horizon of 90 days Marathon Digital is expected to generate 1.11 times less return on investment than MicroStrategy Incorporated. In addition to that, Marathon Digital is 1.08 times more volatile than MicroStrategy Incorporated. It trades about 0.22 of its total potential returns per unit of risk. MicroStrategy Incorporated is currently generating about 0.26 per unit of volatility. If you would invest 24,731 in MicroStrategy Incorporated on August 31, 2024 and sell it today you would earn a total of 14,153 from holding MicroStrategy Incorporated or generate 57.23% 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. MicroStrategy Incorporated
Performance |
| Timeline |
| Marathon Digital Holdings |
| MicroStrategy Incorporated |
Marathon Digital and MicroStrategy Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Digital and MicroStrategy Incorporated
The main advantage of trading using opposite Marathon Digital and MicroStrategy Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Digital position performs unexpectedly, MicroStrategy Incorporated 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 MicroStrategy Incorporated will offset losses from the drop in MicroStrategy Incorporated's long position.| Marathon Digital vs. Hut 8 Corp | Marathon Digital vs. CleanSpark | Marathon Digital vs. Bit Digital | Marathon Digital vs. Bitfarms |
| MicroStrategy Incorporated vs. Autodesk | MicroStrategy Incorporated vs. Intuit Inc | MicroStrategy Incorporated vs. Zoom Video Communications | MicroStrategy Incorporated vs. Snowflake |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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