Correlation Between Invesco Trust and Munivest Fund

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

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

Diversification Opportunities for Invesco Trust and Munivest Fund

0.9

Correlation Coefficient

Invesco Trust  Munivest Fund

Almost no diversification

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

Pair Corralation between Invesco Trust and Munivest Fund

Considering the 90-day investment horizon Invesco Trust is expected to generate 1.1 times less return on investment than Munivest Fund. In addition to that, Invesco Trust is 1.04 times more volatile than Munivest Fund. It trades about 0.03 of its total potential returns per unit of risk. Munivest Fund is currently generating about 0.04 per unit of volatility. If you would invest  631.00  in Munivest Fund on September 24, 2024 and sell it today you would earn a total of  75.00  from holding Munivest Fund or generate 11.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Invesco Trust For  vs.  Munivest Fund

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.

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.

Pair Trading with Invesco Trust and Munivest Fund

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

The idea behind Invesco Trust For and Munivest Fund 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 CEOs Directory module to screen CEOs from public companies around the world.