Correlation Between SM Investments and Argo Group

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

By analyzing existing cross correlation between SM Investments and Argo Group International, you can compare the effects of market volatilities on SM Investments and Argo Group 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 SM Investments with a short position of Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Investments and Argo Group.

Diversification Opportunities for SM Investments and Argo Group

0.52

Correlation Coefficient

SM Investments  Argo Group

Very weak diversification

The 3 months correlation between SVTMF and Argo is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SM Investments and Argo Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group International and SM Investments 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 SM Investments are associated (or correlated) with Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group International has no effect on the direction of SM Investments i.e., SM Investments and Argo Group go up and down completely randomly.

Pair Corralation between SM Investments and Argo Group

Assuming the 90 days horizon SM Investments is expected to generate 9.38 times less return on investment than Argo Group. But when comparing it to its historical volatility, SM Investments is 2.88 times less risky than Argo Group. It trades about 0.13 of its potential returns per unit of risk. Argo Group International is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  2,473  in Argo Group International on May 13, 2025 and sell it today you would earn a total of  61.00  from holding Argo Group International or generate 2.47% return on investment over 90 days.

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

SM Investments  vs.  Argo Group International

SM Investments

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in SM Investments are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, SM Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Argo Group International

Risk-Adjusted Performance

High

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Group International are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Argo Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SM Investments and Argo Group

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

The idea behind SM Investments and Argo Group International 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.