Correlation Between InfraCap MLP and ProShares High

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

Diversification Opportunities for InfraCap MLP and ProShares High

0.75

Correlation Coefficient

InfraCap MLP  ProShares High

Poor diversification

The 3 months correlation between InfraCap and ProShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and ProShares High YieldInterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares High Yield 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 ProShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares High Yield has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and ProShares High go up and down completely randomly.

Pair Corralation between InfraCap MLP and ProShares High

Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 3.48 times more return on investment than ProShares High. However, InfraCap MLP is 3.48 times more volatile than ProShares High YieldInterest. It trades about 0.09 of its potential returns per unit of risk. ProShares High YieldInterest is currently generating about 0.15 per unit of risk. If you would invest  2,835  in InfraCap MLP ETF on September 19, 2024 and sell it today you would earn a total of  1,504  from holding InfraCap MLP ETF or generate 53.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.75%
Values	Daily Returns

InfraCap MLP ETF  vs.  ProShares High YieldInterest

InfraCap MLP ETF

Risk-Adjusted Performance

7 of 100

Modest

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 January 2025.

ProShares High Yield

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares High YieldInterest are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, ProShares High is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with InfraCap MLP and ProShares High

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

The idea behind InfraCap MLP ETF and ProShares High YieldInterest 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.