Correlation Between InfraCap MLP and FundX Investment

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

Diversification Opportunities for InfraCap MLP and FundX Investment

0.79

Correlation Coefficient

InfraCap MLP  FundX Investment

Poor diversification

The 3 months correlation between InfraCap and FundX is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and FundX Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FundX Investment 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 FundX Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FundX Investment Trust has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and FundX Investment go up and down completely randomly.

Pair Corralation between InfraCap MLP and FundX Investment

Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 2.47 times more return on investment than FundX Investment. However, InfraCap MLP is 2.47 times more volatile than FundX Investment Trust. It trades about 0.14 of its potential returns per unit of risk. FundX Investment Trust is currently generating about 0.2 per unit of risk. If you would invest  3,967  in InfraCap MLP ETF on September 12, 2024 and sell it today you would earn a total of  452.00  from holding InfraCap MLP ETF or generate 11.39% return on investment over 90 days.

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

InfraCap MLP ETF  vs.  FundX Investment Trust

InfraCap MLP ETF

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InfraCap MLP ETF are ranked lower than 10 (%) 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.

FundX Investment Trust

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FundX Investment Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, FundX Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with InfraCap MLP and FundX Investment

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

The idea behind InfraCap MLP ETF and FundX Investment 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.