Correlation Between Invesco Advantage and Dws Strategic

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

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

Diversification Opportunities for Invesco Advantage and Dws Strategic

-0.07

Correlation Coefficient

Invesco Advantage  Dws Strategic

Good diversification

The 3 months correlation between Invesco and Dws is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Advantage MIT and Dws Strategic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dws Strategic Municipal and Invesco Advantage 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 Advantage MIT are associated (or correlated) with Dws Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dws Strategic Municipal has no effect on the direction of Invesco Advantage i.e., Invesco Advantage and Dws Strategic go up and down completely randomly.

Pair Corralation between Invesco Advantage and Dws Strategic

Considering the 90-day investment horizon Invesco Advantage is expected to generate 22.78 times less return on investment than Dws Strategic. But when comparing it to its historical volatility, Invesco Advantage MIT is 21.23 times less risky than Dws Strategic. It trades about 0.04 of its potential returns per unit of risk. Dws Strategic Municipal is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  763.00  in Dws Strategic Municipal on September 24, 2024 and sell it today you would earn a total of  244.00  from holding Dws Strategic Municipal or generate 31.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.57%
Values	Daily Returns

Invesco Advantage MIT  vs.  Dws Strategic Municipal

Invesco Advantage MIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Advantage MIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Invesco Advantage is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Dws Strategic Municipal

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Dws Strategic Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of very inconsistent basic indicators, Dws Strategic displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Advantage and Dws Strategic

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

The idea behind Invesco Advantage MIT and Dws Strategic Municipal 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.