Correlation Between Lion One and Summit Midstream

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

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

Diversification Opportunities for Lion One and Summit Midstream

-0.61

Correlation Coefficient

Lion One  Summit Midstream

Excellent diversification

The 3 months correlation between Lion and Summit is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream and Lion One 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 Lion One Metals 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 Lion One i.e., Lion One and Summit Midstream go up and down completely randomly.

Pair Corralation between Lion One and Summit Midstream

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Summit Midstream. In addition to that, Lion One is 1.19 times more volatile than Summit Midstream. It trades about -0.09 of its total potential returns per unit of risk. Summit Midstream is currently generating about 0.09 per unit of volatility. If you would invest  1,773  in Summit Midstream on September 14, 2024 and sell it today you would earn a total of  1,818  from holding Summit Midstream or generate 102.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Lion One Metals  vs.  Summit Midstream

Lion One Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Summit Midstream

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summit Midstream has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Summit Midstream is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lion One and Summit Midstream

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

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.