Correlation Between Munivest Fund and Invesco Trust

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

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

Diversification Opportunities for Munivest Fund and Invesco Trust

0.9

Correlation Coefficient

Munivest Fund  Invesco Trust

Almost no diversification

The 3 months correlation between Munivest and Invesco is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Munivest Fund and Invesco Trust For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Trust For and Munivest Fund 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 Munivest Fund are associated (or correlated) with Invesco Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Trust For has no effect on the direction of Munivest Fund i.e., Munivest Fund and Invesco Trust go up and down completely randomly.

Pair Corralation between Munivest Fund and Invesco Trust

Considering the 90-day investment horizon Munivest Fund is expected to under-perform the Invesco Trust. But the fund apears to be less risky and, when comparing its historical volatility, Munivest Fund is 1.15 times less risky than Invesco Trust. The fund trades about -0.24 of its potential returns per unit of risk. The Invesco Trust For is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  1,019  in Invesco Trust For on September 24, 2024 and sell it today you would lose (30.00) from holding Invesco Trust For or give up 2.94% of portfolio value over 90 days.

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

Munivest Fund  vs.  Invesco Trust For

Munivest Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Munivest Fund has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Munivest Fund is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Invesco Trust For

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Trust For has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Invesco Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Munivest Fund and Invesco Trust

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

The idea behind Munivest Fund and Invesco Trust For 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.