Correlation Between InfraCap MLP and KraneShares California
Can any of the company-specific risk be diversified away by investing in both InfraCap MLP and KraneShares California 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 KraneShares California 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 KraneShares California Carbon, you can compare the effects of market volatilities on InfraCap MLP and KraneShares California 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 KraneShares California. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfraCap MLP and KraneShares California.
Diversification Opportunities for InfraCap MLP and KraneShares California
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between InfraCap and KraneShares is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and KraneShares California Carbon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares California 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 KraneShares California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares California has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and KraneShares California go up and down completely randomly.
Pair Corralation between InfraCap MLP and KraneShares California
Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 0.94 times more return on investment than KraneShares California. However, InfraCap MLP ETF is 1.06 times less risky than KraneShares California. It trades about 0.12 of its potential returns per unit of risk. KraneShares California Carbon is currently generating about 0.01 per unit of risk. If you would invest 2,882 in InfraCap MLP ETF on September 2, 2024 and sell it today you would earn a total of 1,849 from holding InfraCap MLP ETF or generate 64.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InfraCap MLP ETF vs. KraneShares California Carbon
Performance |
| Timeline |
| InfraCap MLP ETF |
| KraneShares California |
InfraCap MLP and KraneShares California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfraCap MLP and KraneShares California
The main advantage of trading using opposite InfraCap MLP and KraneShares California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfraCap MLP position performs unexpectedly, KraneShares California 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 KraneShares California will offset losses from the drop in KraneShares California'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 |
| KraneShares California vs. KraneShares European Carbon | KraneShares California vs. iPath Series B | KraneShares California vs. KraneShares Global Carbon |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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