Correlation Between Marathon Digital and Terawulf
Can any of the company-specific risk be diversified away by investing in both Marathon Digital and Terawulf 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 Terawulf 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 Terawulf, you can compare the effects of market volatilities on Marathon Digital and Terawulf 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 Terawulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Digital and Terawulf.
Diversification Opportunities for Marathon Digital and Terawulf
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Marathon and Terawulf is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and Terawulf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terawulf 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 Terawulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terawulf has no effect on the direction of Marathon Digital i.e., Marathon Digital and Terawulf go up and down completely randomly.
Pair Corralation between Marathon Digital and Terawulf
Given the investment horizon of 90 days Marathon Digital is expected to generate 1.42 times less return on investment than Terawulf. But when comparing it to its historical volatility, Marathon Digital Holdings is 1.1 times less risky than Terawulf. It trades about 0.08 of its potential returns per unit of risk. Terawulf is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 78.00 in Terawulf on August 24, 2024 and sell it today you would earn a total of 667.00 from holding Terawulf or generate 855.13% 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. Terawulf
Performance |
| Timeline |
| Marathon Digital Holdings |
| Terawulf |
Marathon Digital and Terawulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marathon Digital and Terawulf
The main advantage of trading using opposite Marathon Digital and Terawulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Digital position performs unexpectedly, Terawulf 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 Terawulf will offset losses from the drop in Terawulf's long position.| Marathon Digital vs. Hut 8 Corp | Marathon Digital vs. CleanSpark | Marathon Digital vs. Bit Digital | Marathon Digital vs. Bitfarms |
| Terawulf vs. Iris Energy | Terawulf vs. Stronghold Digital Mining | Terawulf vs. Argo Blockchain PLC | Terawulf 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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