Correlation Between CleanSpark and Marathon Digital

Can any of the company-specific risk be diversified away by investing in both CleanSpark 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 CleanSpark and Marathon Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CleanSpark and Marathon Digital Holdings, you can compare the effects of market volatilities on CleanSpark 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 CleanSpark with a short position of Marathon Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanSpark and Marathon Digital.

Diversification Opportunities for CleanSpark and Marathon Digital

0.8

Correlation Coefficient

CleanSpark  Marathon Digital

Very poor diversification

The 3 months correlation between CleanSpark and Marathon is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CleanSpark 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 CleanSpark 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 CleanSpark 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 CleanSpark i.e., CleanSpark and Marathon Digital go up and down completely randomly.

Pair Corralation between CleanSpark and Marathon Digital

Given the investment horizon of 90 days CleanSpark is expected to generate 1.24 times more return on investment than Marathon Digital. However, CleanSpark is 1.24 times more volatile than Marathon Digital Holdings. It trades about 0.11 of its potential returns per unit of risk. Marathon Digital Holdings is currently generating about 0.1 per unit of risk. If you would invest  809.00  in CleanSpark on August 7, 2024 and sell it today you would earn a total of  171.00  from holding CleanSpark or generate 21.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

CleanSpark  vs.  Marathon Digital Holdings

CleanSpark

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CleanSpark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CleanSpark is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Marathon Digital Holdings

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Digital Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Marathon Digital is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CleanSpark and Marathon Digital

The main advantage of trading using opposite CleanSpark and Marathon Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanSpark 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.

The idea behind CleanSpark and Marathon Digital Holdings 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.