Correlation Between Summit Midstream and EnLink Midstream

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

Diversification Opportunities for Summit Midstream and EnLink Midstream

0.1

Correlation Coefficient

Summit Midstream  EnLink Midstream

Average diversification

The 3 months correlation between Summit and EnLink is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Summit Midstream and EnLink Midstream LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnLink Midstream LLC 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 EnLink Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnLink Midstream LLC has no effect on the direction of Summit Midstream i.e., Summit Midstream and EnLink Midstream go up and down completely randomly.

Pair Corralation between Summit Midstream and EnLink Midstream

Considering the 90-day investment horizon Summit Midstream is expected to generate 2.37 times less return on investment than EnLink Midstream. In addition to that, Summit Midstream is 2.58 times more volatile than EnLink Midstream LLC. It trades about 0.03 of its total potential returns per unit of risk. EnLink Midstream LLC is currently generating about 0.16 per unit of volatility. If you would invest  1,416  in EnLink Midstream LLC on September 4, 2024 and sell it today you would earn a total of  139.00  from holding EnLink Midstream LLC or generate 9.82% return on investment over 90 days.

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

Summit Midstream  vs.  EnLink Midstream LLC

Summit Midstream

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Midstream are ranked lower than 2 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

EnLink Midstream LLC

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EnLink Midstream LLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, EnLink Midstream may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Summit Midstream and EnLink Midstream

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

The idea behind Summit Midstream and EnLink Midstream LLC 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.