Correlation Between Invesco Markets and Invesco Municipal

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

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

Diversification Opportunities for Invesco Markets and Invesco Municipal

0.6

Correlation Coefficient

Invesco Markets  Invesco Municipal

Poor diversification

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

Pair Corralation between Invesco Markets and Invesco Municipal

Assuming the 90 days trading horizon Invesco Markets Plc is expected to generate 1.17 times more return on investment than Invesco Municipal. However, Invesco Markets is 1.17 times more volatile than Invesco Municipal Bond. It trades about 0.01 of its potential returns per unit of risk. Invesco Municipal Bond is currently generating about -0.01 per unit of risk. If you would invest  5,652  in Invesco Markets Plc on October 11, 2024 and sell it today you would earn a total of  121.00  from holding Invesco Markets Plc or generate 2.14% return on investment over 90 days.

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

Invesco Markets Plc  vs.  Invesco Municipal Bond

Invesco Markets Plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Markets Plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Invesco Markets is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Invesco Municipal Bond

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Municipal Bond are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Invesco Municipal is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Invesco Markets and Invesco Municipal

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

The idea behind Invesco Markets Plc and Invesco Municipal Bond 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.