Correlation Between Summit Midstream and 456837AM5

Can any of the company-specific risk be diversified away by investing in both Summit Midstream and 456837AM5 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 456837AM5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Summit Midstream and ING Groep NV, you can compare the effects of market volatilities on Summit Midstream and 456837AM5 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 456837AM5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Midstream and 456837AM5.

Diversification Opportunities for Summit Midstream and 456837AM5

0.48

Correlation Coefficient

Summit Midstream  456837AM5

Very weak diversification

The 3 months correlation between Summit and 456837AM5 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Summit Midstream and ING Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Groep NV 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 456837AM5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Groep NV has no effect on the direction of Summit Midstream i.e., Summit Midstream and 456837AM5 go up and down completely randomly.

Pair Corralation between Summit Midstream and 456837AM5

Considering the 90-day investment horizon Summit Midstream is expected to generate 5.6 times more return on investment than 456837AM5. However, Summit Midstream is 5.6 times more volatile than ING Groep NV. It trades about 0.03 of its potential returns per unit of risk. ING Groep NV is currently generating about 0.01 per unit of risk. If you would invest  3,520  in Summit Midstream on December 24, 2024 and sell it today you would earn a total of  102.00  from holding Summit Midstream or generate 2.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.89%
Values	Daily Returns

Summit Midstream  vs.  ING Groep NV

Summit Midstream

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Midstream are ranked lower than 2 (%) 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

ING Groep NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days ING Groep NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 456837AM5 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Summit Midstream and 456837AM5

The main advantage of trading using opposite Summit Midstream and 456837AM5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Midstream position performs unexpectedly, 456837AM5 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 456837AM5 will offset losses from the drop in 456837AM5's long position.

The idea behind Summit Midstream and ING Groep NV 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.