Correlation Between InfraCap MLP and ETF Series
Can any of the company-specific risk be diversified away by investing in both InfraCap MLP and ETF Series 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 ETF Series 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 ETF Series Solutions, you can compare the effects of market volatilities on InfraCap MLP and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfraCap MLP and ETF Series.
Diversification Opportunities for InfraCap MLP and ETF Series
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InfraCap and ETF is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and ETF Series go up and down completely randomly.
Pair Corralation between InfraCap MLP and ETF Series
Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 1.29 times more return on investment than ETF Series. However, InfraCap MLP is 1.29 times more volatile than ETF Series Solutions. It trades about 0.09 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.05 per unit of risk. If you would invest 2,646 in InfraCap MLP ETF on September 14, 2024 and sell it today you would earn a total of 1,813 from holding InfraCap MLP ETF or generate 68.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 47.27% |
| Values | Daily Returns |
InfraCap MLP ETF vs. ETF Series Solutions
Performance |
| Timeline |
| InfraCap MLP ETF |
| ETF Series Solutions |
InfraCap MLP and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfraCap MLP and ETF Series
The main advantage of trading using opposite InfraCap MLP and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfraCap MLP position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' 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 |
| ETF Series vs. SPDR Bloomberg Barclays | ETF Series vs. SPDR SSGA Fixed | ETF Series vs. SPDR DoubleLine Short | ETF Series vs. SPDR Portfolio Corporate |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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