Correlation Between Pfizer and Galaxy Digital

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

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

Diversification Opportunities for Pfizer and Galaxy Digital

-0.84

Correlation Coefficient

Pfizer  Galaxy Digital

Pay attention - limited upside

The 3 months correlation between Pfizer and Galaxy is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Galaxy Digital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Digital Holdings and Pfizer 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 Pfizer Inc are associated (or correlated) with Galaxy Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Digital Holdings has no effect on the direction of Pfizer i.e., Pfizer and Galaxy Digital go up and down completely randomly.

Pair Corralation between Pfizer and Galaxy Digital

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Galaxy Digital. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 3.91 times less risky than Galaxy Digital. The stock trades about -0.08 of its potential returns per unit of risk. The Galaxy Digital Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,060  in Galaxy Digital Holdings on September 4, 2024 and sell it today you would earn a total of  751.00  from holding Galaxy Digital Holdings or generate 70.85% return on investment over 90 days.

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

Pfizer Inc  vs.  Galaxy Digital Holdings

Pfizer Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Galaxy Digital Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Digital Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Galaxy Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pfizer and Galaxy Digital

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

The idea behind Pfizer Inc and Galaxy 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.