Correlation Between InfraCap MLP and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both InfraCap MLP and ProShares UltraShort 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 InfraCap MLP and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InfraCap MLP ETF and ProShares UltraShort MSCI, you can compare the effects of market volatilities on InfraCap MLP and ProShares UltraShort 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 InfraCap MLP with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfraCap MLP and ProShares UltraShort.
Diversification Opportunities for InfraCap MLP and ProShares UltraShort
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between InfraCap and ProShares is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and ProShares UltraShort MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort MSCI and InfraCap MLP 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 InfraCap MLP ETF are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort MSCI has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and ProShares UltraShort go up and down completely randomly.
Pair Corralation between InfraCap MLP and ProShares UltraShort
Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 0.39 times more return on investment than ProShares UltraShort. However, InfraCap MLP ETF is 2.59 times less risky than ProShares UltraShort. It trades about 0.67 of its potential returns per unit of risk. ProShares UltraShort MSCI is currently generating about -0.1 per unit of risk. If you would invest 4,140 in InfraCap MLP ETF on October 20, 2024 and sell it today you would earn a total of 612.00 from holding InfraCap MLP ETF or generate 14.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InfraCap MLP ETF vs. ProShares UltraShort MSCI
Performance |
| Timeline |
| InfraCap MLP ETF |
| ProShares UltraShort MSCI |
InfraCap MLP and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfraCap MLP and ProShares UltraShort
The main advantage of trading using opposite InfraCap MLP and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfraCap MLP position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.| InfraCap MLP vs. Virtus InfraCap Preferred | InfraCap MLP vs. Global X MLP | InfraCap MLP vs. Amplify High Income | InfraCap MLP vs. Alerian MLP ETF |
| ProShares UltraShort vs. ProShares Short SP500 | ProShares UltraShort vs. ProShares Short QQQ | ProShares UltraShort vs. ProShares UltraPro Short | ProShares UltraShort vs. ProShares UltraShort SP500 |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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