Correlation Between InfraCap MLP and IShares MSCI

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

Diversification Opportunities for InfraCap MLP and IShares MSCI

-0.53

Correlation Coefficient

InfraCap MLP  IShares MSCI

Excellent diversification

The 3 months correlation between InfraCap and IShares is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and iShares MSCI Spain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Spain 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Spain has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and IShares MSCI go up and down completely randomly.

Pair Corralation between InfraCap MLP and IShares MSCI

Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 1.3 times more return on investment than IShares MSCI. However, InfraCap MLP is 1.3 times more volatile than iShares MSCI Spain. It trades about 0.1 of its potential returns per unit of risk. iShares MSCI Spain is currently generating about -0.08 per unit of risk. If you would invest  4,030  in InfraCap MLP ETF on October 8, 2024 and sell it today you would earn a total of  330.00  from holding InfraCap MLP ETF or generate 8.19% return on investment over 90 days.

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

InfraCap MLP ETF  vs.  iShares MSCI Spain

InfraCap MLP ETF

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InfraCap MLP ETF are ranked lower than 7 (%) 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 February 2025.

iShares MSCI Spain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Spain has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IShares MSCI is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with InfraCap MLP and IShares MSCI

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

The idea behind InfraCap MLP ETF and iShares MSCI Spain 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.