Correlation Between Summit Midstream and NiSource
Can any of the company-specific risk be diversified away by investing in both Summit Midstream and NiSource 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 NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Midstream and NiSource, you can compare the effects of market volatilities on Summit Midstream and NiSource 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 NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Midstream and NiSource.
Diversification Opportunities for Summit Midstream and NiSource
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and NiSource is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Summit Midstream and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource 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 NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of Summit Midstream i.e., Summit Midstream and NiSource go up and down completely randomly.
Pair Corralation between Summit Midstream and NiSource
Considering the 90-day investment horizon Summit Midstream is expected to generate 1.78 times more return on investment than NiSource. However, Summit Midstream is 1.78 times more volatile than NiSource. It trades about 0.19 of its potential returns per unit of risk. NiSource is currently generating about 0.17 per unit of risk. If you would invest 3,787 in Summit Midstream on November 5, 2024 and sell it today you would earn a total of 367.00 from holding Summit Midstream or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Midstream vs. NiSource
Performance |
| Timeline |
| Summit Midstream |
| NiSource |
Summit Midstream and NiSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Midstream and NiSource
The main advantage of trading using opposite Summit Midstream and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Midstream position performs unexpectedly, NiSource 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 NiSource will offset losses from the drop in NiSource's long position.| Summit Midstream vs. Golden Energy Offshore | Summit Midstream vs. BorgWarner | Summit Midstream vs. WT Offshore | Summit Midstream vs. Modine Manufacturing |
| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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