Correlation Between Evergy, and Summit Midstream

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

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

Diversification Opportunities for Evergy, and Summit Midstream

0.5

Correlation Coefficient

Evergy,  Summit Midstream

Very weak diversification

The 3 months correlation between Evergy, and Summit is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Evergy, and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream and Evergy, 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 Evergy, 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 Evergy, i.e., Evergy, and Summit Midstream go up and down completely randomly.

Pair Corralation between Evergy, and Summit Midstream

Given the investment horizon of 90 days Evergy, is expected to generate 5.55 times less return on investment than Summit Midstream. But when comparing it to its historical volatility, Evergy, is 2.03 times less risky than Summit Midstream. It trades about 0.06 of its potential returns per unit of risk. Summit Midstream is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,516  in Summit Midstream on October 23, 2024 and sell it today you would earn a total of  641.00  from holding Summit Midstream or generate 18.23% return on investment over 90 days.

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

Evergy,  vs.  Summit Midstream

Evergy,

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evergy, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Evergy, is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Summit Midstream

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Midstream are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting primary indicators, Summit Midstream exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evergy, and Summit Midstream

The main advantage of trading using opposite Evergy, and Summit Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergy, 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 Evergy, 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.