Correlation Between Nuveen Missouri and Invesco Municipal

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

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

Diversification Opportunities for Nuveen Missouri and Invesco Municipal

-0.13

Correlation Coefficient

Nuveen Missouri  Invesco Municipal

Good diversification

The 3 months correlation between Nuveen and Invesco is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Missouri Quality 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 Nuveen Missouri 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 Nuveen Missouri Quality 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 Nuveen Missouri i.e., Nuveen Missouri and Invesco Municipal go up and down completely randomly.

Pair Corralation between Nuveen Missouri and Invesco Municipal

Considering the 90-day investment horizon Nuveen Missouri Quality is expected to under-perform the Invesco Municipal. In addition to that, Nuveen Missouri is 3.23 times more volatile than Invesco Municipal Trust. It trades about -0.07 of its total potential returns per unit of risk. Invesco Municipal Trust is currently generating about 0.04 per unit of volatility. If you would invest  950.00  in Invesco Municipal Trust on December 19, 2024 and sell it today you would earn a total of  12.00  from holding Invesco Municipal Trust or generate 1.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Nuveen Missouri Quality  vs.  Invesco Municipal Trust

Nuveen Missouri Quality

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen Missouri Quality has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Invesco Municipal Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Municipal Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Nuveen Missouri and Invesco Municipal

The main advantage of trading using opposite Nuveen Missouri and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Missouri 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 Nuveen Missouri Quality 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.