Correlation Between MACYS and Summit Midstream

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

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

Diversification Opportunities for MACYS and Summit Midstream

-0.03

Correlation Coefficient

MACYS  Summit Midstream

Good diversification

The 3 months correlation between MACYS and Summit is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding MACYS RETAIL HLDGS and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream and MACYS 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 MACYS RETAIL HLDGS 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 MACYS i.e., MACYS and Summit Midstream go up and down completely randomly.

Pair Corralation between MACYS and Summit Midstream

Assuming the 90 days trading horizon MACYS RETAIL HLDGS is expected to under-perform the Summit Midstream. But the bond apears to be less risky and, when comparing its historical volatility, MACYS RETAIL HLDGS is 1.49 times less risky than Summit Midstream. The bond trades about 0.0 of its potential returns per unit of risk. The Summit Midstream is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,459  in Summit Midstream on September 27, 2024 and sell it today you would earn a total of  61.00  from holding Summit Midstream or generate 1.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

MACYS RETAIL HLDGS  vs.  Summit Midstream

MACYS RETAIL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Summit Midstream

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Midstream are ranked lower than 1 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MACYS and Summit Midstream

The main advantage of trading using opposite MACYS and Summit Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACYS 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 MACYS RETAIL HLDGS 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.