Correlation Between Summit Midstream and Beneficient

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

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

Diversification Opportunities for Summit Midstream and Beneficient

-0.38

Correlation Coefficient

Summit Midstream  Beneficient

Very good diversification

The 3 months correlation between Summit and Beneficient is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Summit Midstream and Beneficient Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beneficient Class and Summit Midstream 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 Summit Midstream are associated (or correlated) with Beneficient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beneficient Class has no effect on the direction of Summit Midstream i.e., Summit Midstream and Beneficient go up and down completely randomly.

Pair Corralation between Summit Midstream and Beneficient

Considering the 90-day investment horizon Summit Midstream is expected to generate 0.2 times more return on investment than Beneficient. However, Summit Midstream is 5.01 times less risky than Beneficient. It trades about 0.04 of its potential returns per unit of risk. Beneficient Class A is currently generating about -0.03 per unit of risk. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Summit Midstream  vs.  Beneficient Class A

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.

Beneficient Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beneficient Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Summit Midstream and Beneficient

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

The idea behind Summit Midstream and Beneficient Class A 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..