Correlation Between InfraCap MLP and ProShares
Can any of the company-specific risk be diversified away by investing in both InfraCap MLP and ProShares 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 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 SP MidCap, you can compare the effects of market volatilities on InfraCap MLP and ProShares 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfraCap MLP and ProShares.
Diversification Opportunities for InfraCap MLP and ProShares
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between InfraCap and ProShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and ProShares SP MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP MidCap 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP MidCap has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and ProShares go up and down completely randomly.
Pair Corralation between InfraCap MLP and ProShares
Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 1.3 times more return on investment than ProShares. However, InfraCap MLP is 1.3 times more volatile than ProShares SP MidCap. It trades about 0.11 of its potential returns per unit of risk. ProShares SP MidCap is currently generating about 0.09 per unit of risk. If you would invest 2,896 in InfraCap MLP ETF on August 27, 2024 and sell it today you would earn a total of 1,649 from holding InfraCap MLP ETF or generate 56.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
InfraCap MLP ETF vs. ProShares SP MidCap
Performance |
| Timeline |
| InfraCap MLP ETF |
| ProShares SP MidCap |
InfraCap MLP and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfraCap MLP and ProShares
The main advantage of trading using opposite InfraCap MLP and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfraCap MLP position performs unexpectedly, ProShares 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 will offset losses from the drop in ProShares' 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 vs. Vanguard Mid Cap Index | ProShares vs. iShares Core SP | ProShares vs. SPDR SP MIDCAP | ProShares vs. First Trust Dorsey |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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