Correlation Between Dupont De and Summit Midstream

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

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

Diversification Opportunities for Dupont De and Summit Midstream

-0.73

Correlation Coefficient

Dupont De  Summit Midstream

Pay attention - limited upside

The 3 months correlation between Dupont and Summit is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Summit Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream Partners and Dupont De 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 Dupont De Nemours 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 Partners has no effect on the direction of Dupont De i.e., Dupont De and Summit Midstream go up and down completely randomly.

Pair Corralation between Dupont De and Summit Midstream

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.24 times more return on investment than Summit Midstream. However, Dupont De Nemours is 4.25 times less risky than Summit Midstream. It trades about 0.03 of its potential returns per unit of risk. Summit Midstream Partners is currently generating about 0.0 per unit of risk. If you would invest  6,556  in Dupont De Nemours on October 5, 2024 and sell it today you would earn a total of  987.00  from holding Dupont De Nemours or generate 15.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	76.48%
Values	Daily Returns

Dupont De Nemours  vs.  Summit Midstream Partners

Dupont De Nemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Summit Midstream Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summit Midstream Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Summit Midstream is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Dupont De and Summit Midstream

The main advantage of trading using opposite Dupont De and Summit Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De 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 Dupont De Nemours and Summit Midstream Partners 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.