Correlation Between Sensient Technologies and Summit Midstream

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

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

Diversification Opportunities for Sensient Technologies and Summit Midstream

0.17

Correlation Coefficient

Sensient Technologies  Summit Midstream

Average diversification

The 3 months correlation between Sensient and Summit is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream and Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies i.e., Sensient Technologies and Summit Midstream go up and down completely randomly.

Pair Corralation between Sensient Technologies and Summit Midstream

Considering the 90-day investment horizon Sensient Technologies is expected to under-perform the Summit Midstream. But the stock apears to be less risky and, when comparing its historical volatility, Sensient Technologies is 2.53 times less risky than Summit Midstream. The stock trades about -0.14 of its potential returns per unit of risk. The Summit Midstream is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,444  in Summit Midstream on July 16, 2025 and sell it today you would lose (403.00) from holding Summit Midstream or give up 16.49% of portfolio value over 90 days.

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

Sensient Technologies  vs.  Summit Midstream

Sensient Technologies

Risk-Adjusted Performance

Weakest

Over the last 90 days Sensient Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in November 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Summit Midstream

Risk-Adjusted Performance

Weakest

Over the last 90 days Summit Midstream has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in November 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Sensient Technologies and Summit Midstream

The main advantage of trading using opposite Sensient Technologies and Summit Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies 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 Sensient Technologies 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.