Correlation Between Chemours and Summit Midstream

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

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

Diversification Opportunities for Chemours and Summit Midstream

0.35

Correlation Coefficient

Chemours  Summit Midstream

Weak diversification

The 3 months correlation between Chemours and Summit is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream and Chemours 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 Chemours Co are associated (or correlated) with Summit Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Midstream has no effect on the direction of Chemours i.e., Chemours and Summit Midstream go up and down completely randomly.

Pair Corralation between Chemours and Summit Midstream

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the Summit Midstream. In addition to that, Chemours is 2.55 times more volatile than Summit Midstream. It trades about -0.19 of its total potential returns per unit of risk. Summit Midstream is currently generating about 0.04 per unit of volatility. If you would invest  3,739  in Summit Midstream on October 10, 2024 and sell it today you would earn a total of  34.00  from holding Summit Midstream or generate 0.91% return on investment over 90 days.

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

Chemours Co  vs.  Summit Midstream

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Chemours is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Summit Midstream

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Midstream are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Summit Midstream is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Chemours and Summit Midstream

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

The idea behind Chemours Co and Summit Midstream 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.