Correlation Between Invesco Municipal and Oaktree Capital

Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Oaktree Capital 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 Oaktree Capital 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 Oaktree Capital Group, you can compare the effects of market volatilities on Invesco Municipal and Oaktree Capital 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 Oaktree Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Oaktree Capital.

Diversification Opportunities for Invesco Municipal and Oaktree Capital

0.48

Correlation Coefficient

Invesco Municipal  Oaktree Capital

Very weak diversification

The 3 months correlation between Invesco and Oaktree is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Trust and Oaktree Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oaktree Capital Group 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 Oaktree Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oaktree Capital Group has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Oaktree Capital go up and down completely randomly.

Pair Corralation between Invesco Municipal and Oaktree Capital

Considering the 90-day investment horizon Invesco Municipal Trust is expected to generate 0.94 times more return on investment than Oaktree Capital. However, Invesco Municipal Trust is 1.06 times less risky than Oaktree Capital. It trades about -0.22 of its potential returns per unit of risk. Oaktree Capital Group is currently generating about -0.33 per unit of risk. If you would invest  991.00  in Invesco Municipal Trust on September 26, 2024 and sell it today you would lose (35.00) from holding Invesco Municipal Trust or give up 3.53% 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.  Oaktree Capital Group

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.

Oaktree Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oaktree Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Invesco Municipal and Oaktree Capital

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

The idea behind Invesco Municipal Trust and Oaktree Capital Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.