Correlation Between Morgan Stanley and Marathon Digital
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley 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 Morgan Stanley and Marathon Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley and Marathon Digital Holdings, you can compare the effects of market volatilities on Morgan Stanley 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 Morgan Stanley with a short position of Marathon Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Marathon Digital.
Diversification Opportunities for Morgan Stanley and Marathon Digital
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Morgan and Marathon is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley i.e., Morgan Stanley and Marathon Digital go up and down completely randomly.
Pair Corralation between Morgan Stanley and Marathon Digital
Allowing for the 90-day total investment horizon Morgan Stanley is expected to generate 4.5 times less return on investment than Marathon Digital. But when comparing it to its historical volatility, Morgan Stanley is 3.58 times less risky than Marathon Digital. It trades about 0.22 of its potential returns per unit of risk. Marathon Digital Holdings is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,677 in Marathon Digital Holdings on September 1, 2024 and sell it today you would earn a total of 1,065 from holding Marathon Digital Holdings or generate 63.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Stanley vs. Marathon Digital Holdings
Performance |
| Timeline |
| Morgan Stanley |
| Marathon Digital Holdings |
Morgan Stanley and Marathon Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Marathon Digital
The main advantage of trading using opposite Morgan Stanley and Marathon Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley 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.| Morgan Stanley vs. Goldman Sachs Group | Morgan Stanley vs. Riot Blockchain | Morgan Stanley vs. Marathon Digital Holdings | Morgan Stanley vs. Applied Blockchain |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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