Correlation Between Galaxy Digital and Brookfield Business

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

Diversification Opportunities for Galaxy Digital and Brookfield Business

0.3

Correlation Coefficient

Galaxy Digital  Brookfield Business

Weak diversification

The 3 months correlation between Galaxy and Brookfield is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Digital Holdings and Brookfield Business Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business Corp 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 Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business Corp has no effect on the direction of Galaxy Digital i.e., Galaxy Digital and Brookfield Business go up and down completely randomly.

Pair Corralation between Galaxy Digital and Brookfield Business

Assuming the 90 days trading horizon Galaxy Digital Holdings is expected to generate 2.28 times more return on investment than Brookfield Business. However, Galaxy Digital is 2.28 times more volatile than Brookfield Business Corp. It trades about 0.12 of its potential returns per unit of risk. Brookfield Business Corp is currently generating about 0.02 per unit of risk. If you would invest  1,016  in Galaxy Digital Holdings on October 24, 2024 and sell it today you would earn a total of  2,109  from holding Galaxy Digital Holdings or generate 207.58% return on investment over 90 days.

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

Galaxy Digital Holdings  vs.  Brookfield Business Corp

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. 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.

Brookfield Business Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Brookfield Business is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Galaxy Digital and Brookfield Business

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

The idea behind Galaxy Digital Holdings and Brookfield Business 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.