Correlation Between Marathon Digital and Scully Royalty

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

Diversification Opportunities for Marathon Digital and Scully Royalty

-0.59

Correlation Coefficient

Marathon Digital  Scully Royalty

Excellent diversification

The 3 months correlation between Marathon and Scully is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and Scully Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scully Royalty 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 Scully Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scully Royalty has no effect on the direction of Marathon Digital i.e., Marathon Digital and Scully Royalty go up and down completely randomly.

Pair Corralation between Marathon Digital and Scully Royalty

Given the investment horizon of 90 days Marathon Digital Holdings is expected to generate 1.73 times more return on investment than Scully Royalty. However, Marathon Digital is 1.73 times more volatile than Scully Royalty. It trades about 0.08 of its potential returns per unit of risk. Scully Royalty is currently generating about 0.09 per unit of risk. If you would invest  776.00  in Marathon Digital Holdings on July 16, 2024 and sell it today you would earn a total of  832.00  from holding Marathon Digital Holdings or generate 107.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Marathon Digital Holdings  vs.  Scully Royalty

Marathon Digital Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marathon Digital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Scully Royalty

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Scully Royalty are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Scully Royalty may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Marathon Digital and Scully Royalty

The main advantage of trading using opposite Marathon Digital and Scully Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Digital position performs unexpectedly, Scully Royalty 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 Scully Royalty will offset losses from the drop in Scully Royalty's long position.

The idea behind Marathon Digital Holdings and Scully Royalty 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.