Correlation Between Summit Midstream and Martin Midstream
Can any of the company-specific risk be diversified away by investing in both Summit Midstream and Martin 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 Summit Midstream and Martin Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Midstream and Martin Midstream Partners, you can compare the effects of market volatilities on Summit Midstream and Martin 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 Summit Midstream with a short position of Martin Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Midstream and Martin Midstream.
Diversification Opportunities for Summit Midstream and Martin Midstream
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Martin is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Summit Midstream and Martin Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Midstream Partners 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 Martin Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Midstream Partners has no effect on the direction of Summit Midstream i.e., Summit Midstream and Martin Midstream go up and down completely randomly.
Pair Corralation between Summit Midstream and Martin Midstream
Considering the 90-day investment horizon Summit Midstream is expected to generate 1.73 times more return on investment than Martin Midstream. However, Summit Midstream is 1.73 times more volatile than Martin Midstream Partners. It trades about 0.1 of its potential returns per unit of risk. Martin Midstream Partners is currently generating about 0.14 per unit of risk. If you would invest 1,955 in Summit Midstream on August 27, 2024 and sell it today you would earn a total of 1,780 from holding Summit Midstream or generate 91.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Midstream vs. Martin Midstream Partners
Performance |
| Timeline |
| Summit Midstream |
| Martin Midstream Partners |
Summit Midstream and Martin Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Midstream and Martin Midstream
The main advantage of trading using opposite Summit Midstream and Martin Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Midstream position performs unexpectedly, Martin 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 Martin Midstream will offset losses from the drop in Martin Midstream's long position.| Summit Midstream vs. Artisan Partners Asset | Summit Midstream vs. Equinix | Summit Midstream vs. Small Cap Premium | Summit Midstream vs. Sonida Senior Living |
| Martin Midstream vs. Western Midstream Partners | Martin Midstream vs. EnLink Midstream LLC | Martin Midstream vs. Kinetik Holdings | Martin Midstream vs. NGL Energy Partners |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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