Correlation Between InfraCap MLP and Barclays ETN

Can any of the company-specific risk be diversified away by investing in both InfraCap MLP and Barclays ETN 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 Barclays ETN 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 Barclays ETN Select, you can compare the effects of market volatilities on InfraCap MLP and Barclays ETN 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 Barclays ETN. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfraCap MLP and Barclays ETN.

Diversification Opportunities for InfraCap MLP and Barclays ETN

0.96

Correlation Coefficient

InfraCap MLP  Barclays ETN

Almost no diversification

The 3 months correlation between InfraCap and Barclays is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and Barclays ETN Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays ETN Select 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 Barclays ETN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays ETN Select has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and Barclays ETN go up and down completely randomly.

Pair Corralation between InfraCap MLP and Barclays ETN

Given the investment horizon of 90 days InfraCap MLP is expected to generate 1.17 times less return on investment than Barclays ETN. In addition to that, InfraCap MLP is 1.31 times more volatile than Barclays ETN Select. It trades about 0.12 of its total potential returns per unit of risk. Barclays ETN Select is currently generating about 0.18 per unit of volatility. If you would invest  2,587  in Barclays ETN Select on September 14, 2024 and sell it today you would earn a total of  306.00  from holding Barclays ETN Select or generate 11.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

InfraCap MLP ETF  vs.  Barclays ETN Select

InfraCap MLP ETF

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InfraCap MLP ETF are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, InfraCap MLP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Barclays ETN Select

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barclays ETN Select are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Barclays ETN may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with InfraCap MLP and Barclays ETN

The main advantage of trading using opposite InfraCap MLP and Barclays ETN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfraCap MLP position performs unexpectedly, Barclays ETN 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 Barclays ETN will offset losses from the drop in Barclays ETN's long position.

The idea behind InfraCap MLP ETF and Barclays ETN Select pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.