Correlation Between Virtus AllianzGI and Invesco Municipal

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

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

Diversification Opportunities for Virtus AllianzGI and Invesco Municipal

0.35

Correlation Coefficient

Virtus AllianzGI  Invesco Municipal

Weak diversification

The 3 months correlation between Virtus and Invesco is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Virtus AllianzGI Convertible and Invesco Municipal Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Trust and Virtus AllianzGI 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 Virtus AllianzGI Convertible 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 Trust has no effect on the direction of Virtus AllianzGI i.e., Virtus AllianzGI and Invesco Municipal go up and down completely randomly.

Pair Corralation between Virtus AllianzGI and Invesco Municipal

Assuming the 90 days trading horizon Virtus AllianzGI Convertible is expected to under-perform the Invesco Municipal. In addition to that, Virtus AllianzGI is 1.22 times more volatile than Invesco Municipal Trust. It trades about -0.01 of its total potential returns per unit of risk. Invesco Municipal Trust is currently generating about 0.24 per unit of volatility. If you would invest  950.00  in Invesco Municipal Trust on October 22, 2024 and sell it today you would earn a total of  31.00  from holding Invesco Municipal Trust or generate 3.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Virtus AllianzGI Convertible  vs.  Invesco Municipal Trust

Virtus AllianzGI Con

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus AllianzGI Convertible has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Invesco Municipal Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Municipal Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Invesco Municipal is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Virtus AllianzGI and Invesco Municipal

The main advantage of trading using opposite Virtus AllianzGI and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus AllianzGI 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 Virtus AllianzGI Convertible and Invesco Municipal 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.