Correlation Between Galaxy Digital and Prime Dividend

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

Diversification Opportunities for Galaxy Digital and Prime Dividend

0.54

Correlation Coefficient

Galaxy Digital  Prime Dividend

Very weak diversification

The 3 months correlation between Galaxy and Prime is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Digital Holdings and Prime Dividend Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Dividend 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 Prime Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Dividend Corp has no effect on the direction of Galaxy Digital i.e., Galaxy Digital and Prime Dividend go up and down completely randomly.

Pair Corralation between Galaxy Digital and Prime Dividend

Assuming the 90 days trading horizon Galaxy Digital Holdings is expected to under-perform the Prime Dividend. In addition to that, Galaxy Digital is 2.6 times more volatile than Prime Dividend Corp. It trades about -0.1 of its total potential returns per unit of risk. Prime Dividend Corp is currently generating about -0.06 per unit of volatility. If you would invest  858.00  in Prime Dividend Corp on December 22, 2024 and sell it today you would lose (63.00) from holding Prime Dividend Corp or give up 7.34% of portfolio value over 90 days.

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

Galaxy Digital Holdings  vs.  Prime Dividend Corp

Galaxy Digital Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Galaxy Digital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Prime Dividend Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prime Dividend Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Galaxy Digital and Prime Dividend

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

The idea behind Galaxy Digital Holdings and Prime Dividend 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.