Correlation Between Summit Midstream and Lifezone Metals

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

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

Diversification Opportunities for Summit Midstream and Lifezone Metals

0.45

Correlation Coefficient

Summit Midstream  Lifezone Metals

Very weak diversification

The 3 months correlation between Summit and Lifezone is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Summit Midstream and Lifezone Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifezone Metals 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 Lifezone Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifezone Metals has no effect on the direction of Summit Midstream i.e., Summit Midstream and Lifezone Metals go up and down completely randomly.

Pair Corralation between Summit Midstream and Lifezone Metals

Considering the 90-day investment horizon Summit Midstream is expected to generate 0.59 times more return on investment than Lifezone Metals. However, Summit Midstream is 1.71 times less risky than Lifezone Metals. It trades about 0.05 of its potential returns per unit of risk. Lifezone Metals Limited is currently generating about -0.03 per unit of risk. If you would invest  3,422  in Summit Midstream on October 8, 2024 and sell it today you would earn a total of  378.00  from holding Summit Midstream or generate 11.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Summit Midstream  vs.  Lifezone Metals Limited

Summit Midstream

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Midstream are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Summit Midstream may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lifezone Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lifezone Metals Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Lifezone Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Summit Midstream and Lifezone Metals

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

The idea behind Summit Midstream and Lifezone Metals Limited 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.