Correlation Between NYSE Composite and Summit Midstream
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Summit Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Summit Midstream, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Summit Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Summit Midstream.
Diversification Opportunities for NYSE Composite and Summit Midstream
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Summit is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Summit Midstream go up and down completely randomly.
Pair Corralation between NYSE Composite and Summit Midstream
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.86 times less return on investment than Summit Midstream. But when comparing it to its historical volatility, NYSE Composite is 3.11 times less risky than Summit Midstream. It trades about 0.24 of its potential returns per unit of risk. Summit Midstream is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,500 in Summit Midstream on August 28, 2024 and sell it today you would earn a total of 213.00 from holding Summit Midstream or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Summit Midstream
Performance |
| Timeline |
NYSE Composite and Summit Midstream Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Summit Midstream
Pair trading matchups for Summit Midstream
Pair Trading with NYSE Composite and Summit Midstream
The main advantage of trading using opposite NYSE Composite and Summit Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Summit Midstream vs. Molson Coors Brewing | Summit Midstream vs. Parker Hannifin | Summit Midstream vs. Summit Materials | Summit Midstream vs. Consol Energy |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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