Correlation Between Galaxy Digital and Premium Income

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

Diversification Opportunities for Galaxy Digital and Premium Income

0.89

Correlation Coefficient

Galaxy Digital  Premium Income

Very poor diversification

The 3 months correlation between Galaxy and Premium is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Digital Holdings and Premium Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Income 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 Premium Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Income has no effect on the direction of Galaxy Digital i.e., Galaxy Digital and Premium Income go up and down completely randomly.

Pair Corralation between Galaxy Digital and Premium Income

Assuming the 90 days trading horizon Galaxy Digital Holdings is expected to under-perform the Premium Income. In addition to that, Galaxy Digital is 3.7 times more volatile than Premium Income. It trades about -0.11 of its total potential returns per unit of risk. Premium Income is currently generating about -0.16 per unit of volatility. If you would invest  609.00  in Premium Income on December 24, 2024 and sell it today you would lose (77.00) from holding Premium Income or give up 12.64% of portfolio value over 90 days.

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

Galaxy Digital Holdings  vs.  Premium Income

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.

Premium Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premium Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Galaxy Digital and Premium Income

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

The idea behind Galaxy Digital Holdings and Premium Income 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.