Correlation Between Teekay and Summit Midstream
Can any of the company-specific risk be diversified away by investing in both Teekay 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 Teekay and Summit Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teekay and Summit Midstream, you can compare the effects of market volatilities on Teekay 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 Teekay with a short position of Summit Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teekay and Summit Midstream.
Diversification Opportunities for Teekay and Summit Midstream
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Teekay and Summit is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Teekay and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream and Teekay 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 Teekay 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 Teekay i.e., Teekay and Summit Midstream go up and down completely randomly.
Pair Corralation between Teekay and Summit Midstream
Allowing for the 90-day total investment horizon Teekay is expected to under-perform the Summit Midstream. But the stock apears to be less risky and, when comparing its historical volatility, Teekay is 1.11 times less risky than Summit Midstream. The stock trades about -0.33 of its potential returns per unit of risk. The Summit Midstream is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,492 in Summit Midstream on September 1, 2024 and sell it today you would earn a total of 287.00 from holding Summit Midstream or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teekay vs. Summit Midstream
Performance |
| Timeline |
| Teekay |
| Summit Midstream |
Teekay and Summit Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teekay and Summit Midstream
The main advantage of trading using opposite Teekay and Summit Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teekay 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.| Teekay vs. Teekay Tankers | Teekay vs. DHT Holdings | Teekay vs. Frontline | Teekay vs. International Seaways |
| Summit Midstream vs. Plains All American | Summit Midstream vs. Hess Midstream Partners | Summit Midstream vs. Plains GP Holdings | Summit Midstream vs. Antero Midstream 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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