Correlation Between Summit Midstream and Antero Midstream

Can any of the company-specific risk be diversified away by investing in both Summit Midstream and Antero 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 Antero 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 Antero Midstream Partners, you can compare the effects of market volatilities on Summit Midstream and Antero 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 Antero Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Midstream and Antero Midstream.

Diversification Opportunities for Summit Midstream and Antero Midstream

0.31

Correlation Coefficient

Summit Midstream  Antero Midstream

Weak diversification

The 3 months correlation between Summit and Antero is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Summit Midstream and Antero Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antero 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 Antero Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antero Midstream Partners has no effect on the direction of Summit Midstream i.e., Summit Midstream and Antero Midstream go up and down completely randomly.

Pair Corralation between Summit Midstream and Antero Midstream

Considering the 90-day investment horizon Summit Midstream is expected to generate 2.95 times more return on investment than Antero Midstream. However, Summit Midstream is 2.95 times more volatile than Antero Midstream Partners. It trades about 0.09 of its potential returns per unit of risk. Antero Midstream Partners is currently generating about 0.08 per unit of risk. If you would invest  1,425  in Summit Midstream on September 12, 2024 and sell it today you would earn a total of  2,322  from holding Summit Midstream or generate 162.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Summit Midstream  vs.  Antero Midstream Partners

Summit Midstream

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Midstream are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Summit Midstream is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Antero Midstream Partners

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Midstream Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Antero Midstream is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Summit Midstream and Antero Midstream

The main advantage of trading using opposite Summit Midstream and Antero Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Midstream position performs unexpectedly, Antero 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 Antero Midstream will offset losses from the drop in Antero Midstream's long position.

The idea behind Summit Midstream and Antero Midstream Partners 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..