Correlation Between Eisai and Summit Midstream
Can any of the company-specific risk be diversified away by investing in both Eisai 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 Eisai and Summit Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eisai Co and Summit Midstream Partners, you can compare the effects of market volatilities on Eisai 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 Eisai with a short position of Summit Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eisai and Summit Midstream.
Diversification Opportunities for Eisai and Summit Midstream
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eisai and Summit is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eisai Co 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 Eisai 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 Eisai 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 Partners has no effect on the direction of Eisai i.e., Eisai and Summit Midstream go up and down completely randomly.
Pair Corralation between Eisai and Summit Midstream
If you would invest (100.00) in Summit Midstream Partners on September 14, 2024 and sell it today you would earn a total of 100.00 from holding Summit Midstream Partners or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 0.0% |
Values | Daily Returns |
Eisai Co vs. Summit Midstream Partners
Performance |
Timeline |
Eisai |
Summit Midstream Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Eisai and Summit Midstream Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eisai and Summit Midstream
The main advantage of trading using opposite Eisai and Summit Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eisai 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 Eisai Co 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.Summit Midstream vs. Genesis Energy LP | ||
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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