Correlation Between Marathon Digital and Xtrackers California

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Can any of the company-specific risk be diversified away by investing in both Marathon Digital and Xtrackers California 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 Xtrackers California 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 Xtrackers California Municipal, you can compare the effects of market volatilities on Marathon Digital and Xtrackers California 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 Xtrackers California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marathon Digital and Xtrackers California.

Diversification Opportunities for Marathon Digital and Xtrackers California

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Marathon and Xtrackers is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and Xtrackers California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers California 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 Xtrackers California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers California has no effect on the direction of Marathon Digital i.e., Marathon Digital and Xtrackers California go up and down completely randomly.

Pair Corralation between Marathon Digital and Xtrackers California

Given the investment horizon of 90 days Marathon Digital Holdings is expected to generate 39.15 times more return on investment than Xtrackers California. However, Marathon Digital is 39.15 times more volatile than Xtrackers California Municipal. It trades about 0.04 of its potential returns per unit of risk. Xtrackers California Municipal is currently generating about 0.04 per unit of risk. If you would invest  2,268  in Marathon Digital Holdings on December 29, 2023 and sell it today you would lose (10.00) from holding Marathon Digital Holdings or give up 0.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy14.55%
ValuesDaily Returns

Marathon Digital Holdings  vs.  Xtrackers California Municipal

 Performance 
       Timeline  
Marathon Digital Holdings 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Digital Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Marathon Digital sustained solid returns over the last few months and may actually be approaching a breakup point.
Xtrackers California 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Xtrackers California Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xtrackers California is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Marathon Digital and Xtrackers California Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Marathon Digital and Xtrackers California

The main advantage of trading using opposite Marathon Digital and Xtrackers California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Digital position performs unexpectedly, Xtrackers California 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 Xtrackers California will offset losses from the drop in Xtrackers California's long position.
The idea behind Marathon Digital Holdings and Xtrackers California Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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