Correlation Between Galaxy Digital and Brompton Split

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

Diversification Opportunities for Galaxy Digital and Brompton Split

-0.11

Correlation Coefficient

Galaxy Digital  Brompton Split

Good diversification

The 3 months correlation between Galaxy and Brompton is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Digital Holdings and Brompton Split Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brompton Split Banc 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 Brompton Split. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brompton Split Banc has no effect on the direction of Galaxy Digital i.e., Galaxy Digital and Brompton Split go up and down completely randomly.

Pair Corralation between Galaxy Digital and Brompton Split

Assuming the 90 days trading horizon Galaxy Digital Holdings is expected to generate 5.02 times more return on investment than Brompton Split. However, Galaxy Digital is 5.02 times more volatile than Brompton Split Banc. It trades about 0.26 of its potential returns per unit of risk. Brompton Split Banc is currently generating about 0.15 per unit of risk. If you would invest  2,567  in Galaxy Digital Holdings on October 24, 2024 and sell it today you would earn a total of  558.00  from holding Galaxy Digital Holdings or generate 21.74% return on investment over 90 days.

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

Galaxy Digital Holdings  vs.  Brompton Split Banc

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.

Brompton Split Banc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brompton Split Banc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Brompton Split 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 Brompton Split

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

The idea behind Galaxy Digital Holdings and Brompton Split Banc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.