Correlation Between Virtus Dividend and Invesco Municipal

Can any of the company-specific risk be diversified away by investing in both Virtus Dividend 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 Dividend 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 Dividend Interest and Invesco Municipal Opportunity, you can compare the effects of market volatilities on Virtus Dividend 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 Dividend with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Dividend and Invesco Municipal.

Diversification Opportunities for Virtus Dividend and Invesco Municipal

0.5

Correlation Coefficient

Virtus Dividend  Invesco Municipal

Very weak diversification

The 3 months correlation between Virtus and Invesco is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Dividend Interest and Invesco Municipal Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal and Virtus Dividend 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 Dividend Interest 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 has no effect on the direction of Virtus Dividend i.e., Virtus Dividend and Invesco Municipal go up and down completely randomly.

Pair Corralation between Virtus Dividend and Invesco Municipal

Considering the 90-day investment horizon Virtus Dividend Interest is expected to generate 1.18 times more return on investment than Invesco Municipal. However, Virtus Dividend is 1.18 times more volatile than Invesco Municipal Opportunity. It trades about 0.07 of its potential returns per unit of risk. Invesco Municipal Opportunity is currently generating about 0.03 per unit of risk. If you would invest  957.00  in Virtus Dividend Interest on September 26, 2024 and sell it today you would earn a total of  299.00  from holding Virtus Dividend Interest or generate 31.24% return on investment over 90 days.

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

Virtus Dividend Interest  vs.  Invesco Municipal Opportunity

Virtus Dividend Interest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Dividend Interest has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively steady technical and fundamental indicators, Virtus Dividend is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Invesco Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Virtus Dividend and Invesco Municipal

The main advantage of trading using opposite Virtus Dividend and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Dividend 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 Dividend Interest and Invesco Municipal Opportunity 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.