Correlation Between InfraCap MLP and TrimTabs Donoghue

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

Diversification Opportunities for InfraCap MLP and TrimTabs Donoghue

-0.57

Correlation Coefficient

InfraCap MLP  TrimTabs Donoghue

Excellent diversification

The 3 months correlation between InfraCap and TrimTabs is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and TrimTabs Donoghue Forlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrimTabs Donoghue 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 TrimTabs Donoghue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrimTabs Donoghue has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and TrimTabs Donoghue go up and down completely randomly.

Pair Corralation between InfraCap MLP and TrimTabs Donoghue

Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 6.67 times more return on investment than TrimTabs Donoghue. However, InfraCap MLP is 6.67 times more volatile than TrimTabs Donoghue Forlines. It trades about 0.04 of its potential returns per unit of risk. TrimTabs Donoghue Forlines is currently generating about -0.05 per unit of risk. If you would invest  4,003  in InfraCap MLP ETF on September 20, 2024 and sell it today you would earn a total of  136.00  from holding InfraCap MLP ETF or generate 3.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

InfraCap MLP ETF  vs.  TrimTabs Donoghue Forlines

InfraCap MLP ETF

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in InfraCap MLP ETF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, InfraCap MLP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

TrimTabs Donoghue

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TrimTabs Donoghue Forlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, TrimTabs Donoghue is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with InfraCap MLP and TrimTabs Donoghue

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

The idea behind InfraCap MLP ETF and TrimTabs Donoghue Forlines 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.