Correlation Between SmartStop Self and Summit Midstream

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

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

Diversification Opportunities for SmartStop Self and Summit Midstream

-0.11

Correlation Coefficient

SmartStop Self  Summit Midstream

Good diversification

The 3 months correlation between SmartStop and Summit is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding SmartStop Self Storage and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream and SmartStop Self 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 SmartStop Self Storage 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 SmartStop Self i.e., SmartStop Self and Summit Midstream go up and down completely randomly.

Pair Corralation between SmartStop Self and Summit Midstream

Assuming the 90 days horizon SmartStop Self is expected to generate 24.95 times less return on investment than Summit Midstream. But when comparing it to its historical volatility, SmartStop Self Storage is 2.43 times less risky than Summit Midstream. It trades about 0.0 of its potential returns per unit of risk. Summit Midstream is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,361  in Summit Midstream on September 26, 2024 and sell it today you would earn a total of  159.00  from holding Summit Midstream or generate 4.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

SmartStop Self Storage  vs.  Summit Midstream

SmartStop Self Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SmartStop Self Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, SmartStop Self is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Summit Midstream

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Midstream are ranked lower than 3 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SmartStop Self and Summit Midstream

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

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.