Correlation Between InfraCap MLP and JPMorgan BetaBuilders

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

Diversification Opportunities for InfraCap MLP and JPMorgan BetaBuilders

-0.6

Correlation Coefficient

InfraCap MLP  JPMorgan BetaBuilders

Excellent diversification

The 3 months correlation between InfraCap and JPMorgan is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding InfraCap MLP ETF and JPMorgan BetaBuilders Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders 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 JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders has no effect on the direction of InfraCap MLP i.e., InfraCap MLP and JPMorgan BetaBuilders go up and down completely randomly.

Pair Corralation between InfraCap MLP and JPMorgan BetaBuilders

Given the investment horizon of 90 days InfraCap MLP ETF is expected to generate 1.28 times more return on investment than JPMorgan BetaBuilders. However, InfraCap MLP is 1.28 times more volatile than JPMorgan BetaBuilders Europe. It trades about 0.2 of its potential returns per unit of risk. JPMorgan BetaBuilders Europe is currently generating about -0.15 per unit of risk. If you would invest  4,031  in InfraCap MLP ETF on August 30, 2024 and sell it today you would earn a total of  584.00  from holding InfraCap MLP ETF or generate 14.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

InfraCap MLP ETF  vs.  JPMorgan BetaBuilders Europe

InfraCap MLP ETF

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in InfraCap MLP ETF are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, InfraCap MLP sustained solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan BetaBuilders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan BetaBuilders Europe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with InfraCap MLP and JPMorgan BetaBuilders

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

The idea behind InfraCap MLP ETF and JPMorgan BetaBuilders Europe 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.