Correlation Between Invesco Quality and Bny Mellon

Can any of the company-specific risk be diversified away by investing in both Invesco Quality and Bny Mellon 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 Invesco Quality and Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Invesco Quality Municipal and Bny Mellon Strategic, you can compare the effects of market volatilities on Invesco Quality and Bny Mellon 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 Invesco Quality with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Quality and Bny Mellon.

Diversification Opportunities for Invesco Quality and Bny Mellon

0.87

Correlation Coefficient

Invesco Quality  Bny Mellon

Very poor diversification

The 3 months correlation between Invesco and Bny is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Quality Municipal and Bny Mellon Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Strategic and Invesco Quality 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 Invesco Quality Municipal are associated (or correlated) with Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Strategic has no effect on the direction of Invesco Quality i.e., Invesco Quality and Bny Mellon go up and down completely randomly.

Pair Corralation between Invesco Quality and Bny Mellon

Considering the 90-day investment horizon Invesco Quality Municipal is expected to generate 0.95 times more return on investment than Bny Mellon. However, Invesco Quality Municipal is 1.06 times less risky than Bny Mellon. It trades about 0.1 of its potential returns per unit of risk. Bny Mellon Strategic is currently generating about 0.08 per unit of risk. If you would invest  895.00  in Invesco Quality Municipal on September 13, 2024 and sell it today you would earn a total of  127.00  from holding Invesco Quality Municipal or generate 14.19% return on investment over 90 days.

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

Invesco Quality Municipal  vs.  Bny Mellon Strategic

Invesco Quality Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Quality Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Invesco Quality is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Bny Mellon Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bny Mellon Strategic has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Bny Mellon is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Invesco Quality and Bny Mellon

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

The idea behind Invesco Quality Municipal and Bny Mellon Strategic 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.