Correlation Between Galaxy Digital and Definity Financial

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

Diversification Opportunities for Galaxy Digital and Definity Financial

-0.56

Correlation Coefficient

Galaxy Digital  Definity Financial

Excellent diversification

The 3 months correlation between Galaxy and Definity is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Digital Holdings and Definity Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definity Financial 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 Definity Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definity Financial Corp has no effect on the direction of Galaxy Digital i.e., Galaxy Digital and Definity Financial go up and down completely randomly.

Pair Corralation between Galaxy Digital and Definity Financial

Assuming the 90 days trading horizon Galaxy Digital Holdings is expected to generate 4.31 times more return on investment than Definity Financial. However, Galaxy Digital is 4.31 times more volatile than Definity Financial Corp. It trades about 0.08 of its potential returns per unit of risk. Definity Financial Corp is currently generating about -0.06 per unit of risk. If you would invest  3,254  in Galaxy Digital Holdings on September 5, 2025 and sell it today you would earn a total of  595.00  from holding Galaxy Digital Holdings or generate 18.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Galaxy Digital Holdings  vs.  Definity Financial Corp

Galaxy Digital Holdings

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Digital Holdings are ranked lower than 6 (%) 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.

Definity Financial Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days Definity Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Definity Financial is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Galaxy Digital and Definity Financial

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

The idea behind Galaxy Digital Holdings and Definity Financial 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.