Correlation Between InfraCap MLP and Capitol Series

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

Diversification Opportunities for InfraCap MLP and Capitol Series

0.85

Correlation Coefficient

InfraCap MLP  Capitol Series

Very poor diversification

The 3 months correlation between InfraCap and Capitol is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and Capitol Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Series Trust 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 Capitol Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Series Trust has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and Capitol Series go up and down completely randomly.

Pair Corralation between InfraCap MLP and Capitol Series

Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 2.11 times more return on investment than Capitol Series. However, InfraCap MLP is 2.11 times more volatile than Capitol Series Trust. It trades about 0.11 of its potential returns per unit of risk. Capitol Series Trust is currently generating about 0.21 per unit of risk. If you would invest  4,060  in InfraCap MLP ETF on September 17, 2024 and sell it today you would earn a total of  365.00  from holding InfraCap MLP ETF or generate 8.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

InfraCap MLP ETF  vs.  Capitol Series Trust

InfraCap MLP ETF

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InfraCap MLP ETF are ranked lower than 8 (%) 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.

Capitol Series Trust

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Series Trust are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Capitol Series may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with InfraCap MLP and Capitol Series

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

The idea behind InfraCap MLP ETF and Capitol Series Trust 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.