Correlation Between Smart Digital and Mativ Holdings

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Can any of the company-specific risk be diversified away by investing in both Smart Digital and Mativ Holdings 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 Smart Digital and Mativ Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart Digital Group and Mativ Holdings, you can compare the effects of market volatilities on Smart Digital and Mativ Holdings 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 Smart Digital with a short position of Mativ Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Digital and Mativ Holdings.

Diversification Opportunities for Smart Digital and Mativ Holdings

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Smart and Mativ is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Smart Digital Group and Mativ Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mativ Holdings and Smart 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 Smart Digital Group are associated (or correlated) with Mativ Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mativ Holdings has no effect on the direction of Smart Digital i.e., Smart Digital and Mativ Holdings go up and down completely randomly.

Pair Corralation between Smart Digital and Mativ Holdings

Considering the 90-day investment horizon Smart Digital Group is expected to generate 3.93 times more return on investment than Mativ Holdings. However, Smart Digital is 3.93 times more volatile than Mativ Holdings. It trades about 0.23 of its potential returns per unit of risk. Mativ Holdings is currently generating about 0.1 per unit of risk. If you would invest  456.00  in Smart Digital Group on May 4, 2025 and sell it today you would earn a total of  1,614  from holding Smart Digital Group or generate 353.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Smart Digital Group  vs.  Mativ Holdings

 Performance 
       Timeline  
Smart Digital Group 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Smart Digital Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Smart Digital displayed solid returns over the last few months and may actually be approaching a breakup point.
Mativ Holdings 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Mativ Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Mativ Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Smart Digital and Mativ Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Smart Digital and Mativ Holdings

The main advantage of trading using opposite Smart Digital and Mativ Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Digital position performs unexpectedly, Mativ Holdings 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 Mativ Holdings will offset losses from the drop in Mativ Holdings' long position.
The idea behind Smart Digital Group and Mativ Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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