Correlation Between Galaxy Digital and Financial

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

By analyzing existing cross correlation between Galaxy Digital Holdings and Financial 15 Split, you can compare the effects of market volatilities on Galaxy Digital and Financial 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 Galaxy Digital with a short position of Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galaxy Digital and Financial.

Diversification Opportunities for Galaxy Digital and Financial

0.91

Correlation Coefficient

Galaxy Digital  Financial

Almost no diversification

The 3 months correlation between Galaxy and Financial is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Digital Holdings and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split and Galaxy 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 Galaxy Digital Holdings are associated (or correlated) with Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of Galaxy Digital i.e., Galaxy Digital and Financial go up and down completely randomly.

Pair Corralation between Galaxy Digital and Financial

Assuming the 90 days trading horizon Galaxy Digital Holdings is expected to generate 22.35 times more return on investment than Financial. However, Galaxy Digital is 22.35 times more volatile than Financial 15 Split. It trades about 0.19 of its potential returns per unit of risk. Financial 15 Split is currently generating about 0.25 per unit of risk. If you would invest  1,410  in Galaxy Digital Holdings on August 31, 2024 and sell it today you would earn a total of  1,105  from holding Galaxy Digital Holdings or generate 78.37% return on investment over 90 days.

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

Galaxy Digital Holdings  vs.  Financial 15 Split

Galaxy Digital Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Digital Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Galaxy Digital displayed solid returns over the last few months and may actually be approaching a breakup point.

Financial 15 Split

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Galaxy Digital and Financial

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

The idea behind Galaxy Digital Holdings and Financial 15 Split 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.