Correlation Between Eisai and Summit Midstream

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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

EisaiSummitDiversified AwayEisaiSummitDiversified Away100%
-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 Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy0.0%
ValuesDaily Returns

Eisai Co  vs.  Summit Midstream Partners

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -20-1001020
JavaScript chart by amCharts 3.21.15ESALF SMLP
       Timeline  
Eisai 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Eisai Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec3032343638
Summit Midstream Partners 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Eisai and Summit Midstream Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.82-3.61-2.4-1.190.01.052.113.164.22 0.0300.0350.0400.0450.050
JavaScript chart by amCharts 3.21.15ESALF SMLP
       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.
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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