Correlation Between InfraCap MLP and SPDR FactSet
Can any of the company-specific risk be diversified away by investing in both InfraCap MLP and SPDR FactSet 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 FactSet 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 FactSet Innovative, you can compare the effects of market volatilities on InfraCap MLP and SPDR FactSet 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 FactSet. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfraCap MLP and SPDR FactSet.
Diversification Opportunities for InfraCap MLP and SPDR FactSet
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between InfraCap and SPDR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and SPDR FactSet Innovative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FactSet Innovative 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 FactSet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FactSet Innovative has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and SPDR FactSet go up and down completely randomly.
Pair Corralation between InfraCap MLP and SPDR FactSet
Given the investment horizon of 90 days InfraCap MLP is expected to generate 1.2 times less return on investment than SPDR FactSet. But when comparing it to its historical volatility, InfraCap MLP ETF is 1.33 times less risky than SPDR FactSet. It trades about 0.09 of its potential returns per unit of risk. SPDR FactSet Innovative is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10,142 in SPDR FactSet Innovative on August 26, 2024 and sell it today you would earn a total of 7,927 from holding SPDR FactSet Innovative or generate 78.16% 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 FactSet Innovative
Performance |
| Timeline |
| InfraCap MLP ETF |
| SPDR FactSet Innovative |
InfraCap MLP and SPDR FactSet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfraCap MLP and SPDR FactSet
The main advantage of trading using opposite InfraCap MLP and SPDR FactSet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfraCap MLP position performs unexpectedly, SPDR FactSet 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 FactSet will offset losses from the drop in SPDR FactSet'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 FactSet vs. SPDR SP Software | SPDR FactSet vs. SPDR Morgan Stanley | SPDR FactSet vs. SPDR SP Health |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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