Correlation Between InfraCap MLP and USCF Midstream
Can any of the company-specific risk be diversified away by investing in both InfraCap MLP and USCF Midstream 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 USCF Midstream 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 USCF Midstream Energy, you can compare the effects of market volatilities on InfraCap MLP and USCF Midstream 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 USCF Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfraCap MLP and USCF Midstream.
Diversification Opportunities for InfraCap MLP and USCF Midstream
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between InfraCap and USCF is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and USCF Midstream Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCF Midstream Energy 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 USCF Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCF Midstream Energy has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and USCF Midstream go up and down completely randomly.
Pair Corralation between InfraCap MLP and USCF Midstream
Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 1.08 times more return on investment than USCF Midstream. However, InfraCap MLP is 1.08 times more volatile than USCF Midstream Energy. It trades about 0.71 of its potential returns per unit of risk. USCF Midstream Energy is currently generating about 0.53 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
InfraCap MLP ETF vs. USCF Midstream Energy
Performance |
| Timeline |
| InfraCap MLP ETF |
| USCF Midstream Energy |
InfraCap MLP and USCF Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfraCap MLP and USCF Midstream
The main advantage of trading using opposite InfraCap MLP and USCF Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfraCap MLP position performs unexpectedly, USCF Midstream 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 USCF Midstream will offset losses from the drop in USCF Midstream'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 |
| USCF Midstream vs. First Trust North | USCF Midstream vs. Global X MLP | USCF Midstream vs. Tortoise North American | USCF Midstream vs. UBS AG London |
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 Stocks Directory module to find actively traded stocks across global markets.
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