Correlation Between InfraCap MLP and IShares Trust
Can any of the company-specific risk be diversified away by investing in both InfraCap MLP and IShares Trust 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 IShares Trust 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 iShares Trust, you can compare the effects of market volatilities on InfraCap MLP and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfraCap MLP and IShares Trust.
Diversification Opportunities for InfraCap MLP and IShares Trust
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between InfraCap and IShares is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and IShares Trust go up and down completely randomly.
Pair Corralation between InfraCap MLP and IShares Trust
Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 2.08 times more return on investment than IShares Trust. However, InfraCap MLP is 2.08 times more volatile than iShares Trust. It trades about 0.71 of its potential returns per unit of risk. iShares Trust is currently generating about 0.08 per unit of risk. If you would invest 3,932 in InfraCap MLP ETF on September 1, 2024 and sell it today you would earn a total of 799.00 from holding InfraCap MLP ETF or generate 20.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
InfraCap MLP ETF vs. iShares Trust
Performance |
| Timeline |
| InfraCap MLP ETF |
| iShares Trust |
InfraCap MLP and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfraCap MLP and IShares Trust
The main advantage of trading using opposite InfraCap MLP and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfraCap MLP position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| InfraCap MLP vs. First Trust North | InfraCap MLP vs. Global X MLP | InfraCap MLP vs. Tortoise North American | InfraCap MLP vs. UBS AG London |
| IShares Trust vs. Invesco BulletShares 2025 | IShares Trust vs. iShares iBonds Dec | IShares Trust vs. Invesco BulletShares 2026 | IShares Trust vs. iShares iBonds Dec |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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