Correlation Between Marathon Digital and Charles Schwab

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

Diversification Opportunities for Marathon Digital and Charles Schwab

0.87

Correlation Coefficient

Marathon Digital  Charles Schwab

Very poor diversification

The 3 months correlation between Marathon and Charles is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and Charles Schwab Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Schwab Corp 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 Charles Schwab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles Schwab Corp has no effect on the direction of Marathon Digital i.e., Marathon Digital and Charles Schwab go up and down completely randomly.

Pair Corralation between Marathon Digital and Charles Schwab

Given the investment horizon of 90 days Marathon Digital Holdings is expected to generate 4.22 times more return on investment than Charles Schwab. However, Marathon Digital is 4.22 times more volatile than Charles Schwab Corp. It trades about 0.16 of its potential returns per unit of risk. Charles Schwab Corp is currently generating about 0.24 per unit of risk. If you would invest  1,526  in Marathon Digital Holdings on August 31, 2024 and sell it today you would earn a total of  1,166  from holding Marathon Digital Holdings or generate 76.41% 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.  Charles Schwab Corp

Marathon Digital Holdings

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Digital Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Marathon Digital sustained solid returns over the last few months and may actually be approaching a breakup point.

Charles Schwab Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Charles Schwab Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical indicators, Charles Schwab showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marathon Digital and Charles Schwab

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

The idea behind Marathon Digital Holdings and Charles Schwab Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.