Correlation Between Galaxy Digital and Sprott Physical

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

Diversification Opportunities for Galaxy Digital and Sprott Physical

-0.79

Correlation Coefficient

Galaxy Digital  Sprott Physical

Pay attention - limited upside

The 3 months correlation between Galaxy and Sprott is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Digital Holdings and Sprott Physical Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Platinum 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Platinum has no effect on the direction of Galaxy Digital i.e., Galaxy Digital and Sprott Physical go up and down completely randomly.

Pair Corralation between Galaxy Digital and Sprott Physical

Assuming the 90 days trading horizon Galaxy Digital Holdings is expected to generate 3.45 times more return on investment than Sprott Physical. However, Galaxy Digital is 3.45 times more volatile than Sprott Physical Platinum. It trades about 0.26 of its potential returns per unit of risk. Sprott Physical Platinum is currently generating about 0.1 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	Weak
Accuracy	100.0%
Values	Daily Returns

Galaxy Digital Holdings  vs.  Sprott Physical Platinum

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.

Sprott Physical Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal 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 Sprott Physical

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

The idea behind Galaxy Digital Holdings and Sprott Physical Platinum 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.