Correlation Between Now and SMG Industries

Can any of the company-specific risk be diversified away by investing in both Now and SMG Industries 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 Now and SMG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Now Inc and SMG Industries, you can compare the effects of market volatilities on Now and SMG Industries 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 Now with a short position of SMG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Now and SMG Industries.

Diversification Opportunities for Now and SMG Industries

-0.04

Correlation Coefficient

Now  SMG Industries

Good diversification

The 3 months correlation between Now and SMG is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Now Inc and SMG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMG Industries and Now 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 Now Inc are associated (or correlated) with SMG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMG Industries has no effect on the direction of Now i.e., Now and SMG Industries go up and down completely randomly.

Pair Corralation between Now and SMG Industries

Given the investment horizon of 90 days Now is expected to generate 13.59 times less return on investment than SMG Industries. But when comparing it to its historical volatility, Now Inc is 7.61 times less risky than SMG Industries. It trades about 0.04 of its potential returns per unit of risk. SMG Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.11  in SMG Industries on May 7, 2025 and sell it today you would earn a total of  0.00  from holding SMG Industries or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Now Inc  vs.  SMG Industries

Now Inc

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Now Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Now is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SMG Industries

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in SMG Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, SMG Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Now and SMG Industries

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

The idea behind Now Inc and SMG Industries 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.