Correlation Between Brandywine Realty and Summit Midstream

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

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

Diversification Opportunities for Brandywine Realty and Summit Midstream

-0.25

Correlation Coefficient

Brandywine Realty  Summit Midstream

Very good diversification

The 3 months correlation between Brandywine and Summit is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Brandywine Realty Trust and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream and Brandywine Realty 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 Brandywine Realty Trust 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 Brandywine Realty i.e., Brandywine Realty and Summit Midstream go up and down completely randomly.

Pair Corralation between Brandywine Realty and Summit Midstream

Considering the 90-day investment horizon Brandywine Realty is expected to generate 1.25 times less return on investment than Summit Midstream. In addition to that, Brandywine Realty is 1.39 times more volatile than Summit Midstream. It trades about 0.02 of its total potential returns per unit of risk. Summit Midstream is currently generating about 0.03 per unit of volatility. If you would invest  3,459  in Summit Midstream on July 29, 2024 and sell it today you would earn a total of  33.00  from holding Summit Midstream or generate 0.95% return on investment over 90 days.

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

Brandywine Realty Trust  vs.  Summit Midstream

Brandywine Realty Trust

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brandywine Realty Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Brandywine Realty may actually be approaching a critical reversion point that can send shares even higher in November 2024.

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Brandywine Realty and Summit Midstream

The main advantage of trading using opposite Brandywine Realty and Summit Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandywine Realty 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 Brandywine Realty Trust 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.