Correlation Between Spectrum Brands and Summit Midstream

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

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

Diversification Opportunities for Spectrum Brands and Summit Midstream

-0.32

Correlation Coefficient

Spectrum Brands  Summit Midstream

Very good diversification

The 3 months correlation between Spectrum and Summit is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands Holdings and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream and Spectrum Brands 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 Spectrum Brands Holdings 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 Spectrum Brands i.e., Spectrum Brands and Summit Midstream go up and down completely randomly.

Pair Corralation between Spectrum Brands and Summit Midstream

Considering the 90-day investment horizon Spectrum Brands Holdings is expected to under-perform the Summit Midstream. But the stock apears to be less risky and, when comparing its historical volatility, Spectrum Brands Holdings is 1.54 times less risky than Summit Midstream. The stock trades about -0.17 of its potential returns per unit of risk. The Summit Midstream is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,494  in Summit Midstream on December 20, 2024 and sell it today you would earn a total of  299.00  from holding Summit Midstream or generate 8.56% return on investment over 90 days.

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

Spectrum Brands Holdings  vs.  Summit Midstream

Spectrum Brands Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spectrum Brands Holdings 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 somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Summit Midstream

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Midstream are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal primary indicators, Summit Midstream may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Spectrum Brands and Summit Midstream

The main advantage of trading using opposite Spectrum Brands and Summit Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Brands 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 Spectrum Brands Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.