Correlation Between InfraCap MLP and SPDR SP
Can any of the company-specific risk be diversified away by investing in both InfraCap MLP and SPDR SP 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 SPDR SP 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 SPDR SP 1500, you can compare the effects of market volatilities on InfraCap MLP and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfraCap MLP and SPDR SP.
Diversification Opportunities for InfraCap MLP and SPDR SP
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between InfraCap and SPDR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and SPDR SP 1500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 1500 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 1500 has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and SPDR SP go up and down completely randomly.
Pair Corralation between InfraCap MLP and SPDR SP
Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 1.35 times more return on investment than SPDR SP. However, InfraCap MLP is 1.35 times more volatile than SPDR SP 1500. It trades about 0.49 of its potential returns per unit of risk. SPDR SP 1500 is currently generating about 0.27 per unit of risk. If you would invest 3,972 in InfraCap MLP ETF on August 29, 2024 and sell it today you would earn a total of 553.00 from holding InfraCap MLP ETF or generate 13.92% 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. SPDR SP 1500
Performance |
| Timeline |
| InfraCap MLP ETF |
| SPDR SP 1500 |
InfraCap MLP and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfraCap MLP and SPDR SP
The main advantage of trading using opposite InfraCap MLP and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfraCap MLP position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP'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 |
| SPDR SP vs. BlackRock ETF Trust | SPDR SP vs. Rbb Fund | SPDR SP vs. Virtus ETF Trust | SPDR SP vs. Amplify CWP Enhanced |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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