Correlation Between Summit Midstream and Marine Petroleum

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

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

Diversification Opportunities for Summit Midstream and Marine Petroleum

-0.3

Correlation Coefficient

Summit Midstream  Marine Petroleum

Very good diversification

The 3 months correlation between Summit and Marine is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Summit Midstream Partners and Marine Petroleum Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Petroleum Trust 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 Partners are associated (or correlated) with Marine Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Petroleum Trust has no effect on the direction of Summit Midstream i.e., Summit Midstream and Marine Petroleum go up and down completely randomly.

Pair Corralation between Summit Midstream and Marine Petroleum

Given the investment horizon of 90 days Summit Midstream Partners is expected to under-perform the Marine Petroleum. In addition to that, Summit Midstream is 2.74 times more volatile than Marine Petroleum Trust. It trades about -0.01 of its total potential returns per unit of risk. Marine Petroleum Trust is currently generating about 0.0 per unit of volatility. If you would invest  476.00  in Marine Petroleum Trust on October 5, 2024 and sell it today you would lose (76.00) from holding Marine Petroleum Trust or give up 15.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.48%
Values	Daily Returns

Summit Midstream Partners  vs.  Marine Petroleum Trust

Summit Midstream Partners

Risk-Adjusted Performance

0 of 100

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.

Marine Petroleum Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marine Petroleum Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Summit Midstream and Marine Petroleum

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

The idea behind Summit Midstream Partners and Marine Petroleum Trust 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.