Correlation Between Invesco Municipal and Virtus AllianzGI

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

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

Diversification Opportunities for Invesco Municipal and Virtus AllianzGI

0.45

Correlation Coefficient

Invesco Municipal  Virtus AllianzGI

Very weak diversification

The 3 months correlation between Invesco and Virtus is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Trust and Virtus AllianzGI Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus AllianzGI Con and Invesco Municipal 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 Municipal Trust are associated (or correlated) with Virtus AllianzGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus AllianzGI Con has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Virtus AllianzGI go up and down completely randomly.

Pair Corralation between Invesco Municipal and Virtus AllianzGI

Considering the 90-day investment horizon Invesco Municipal Trust is expected to under-perform the Virtus AllianzGI. But the stock apears to be less risky and, when comparing its historical volatility, Invesco Municipal Trust is 1.16 times less risky than Virtus AllianzGI. The stock trades about -0.14 of its potential returns per unit of risk. The Virtus AllianzGI Convertible is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  2,172  in Virtus AllianzGI Convertible on October 7, 2024 and sell it today you would lose (43.00) from holding Virtus AllianzGI Convertible or give up 1.98% of portfolio value over 90 days.

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

Invesco Municipal Trust  vs.  Virtus AllianzGI Convertible

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.

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 somewhat strong basic indicators, Virtus AllianzGI is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco Municipal and Virtus AllianzGI

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

The idea behind Invesco Municipal Trust and Virtus AllianzGI Convertible 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.