Correlation Between Invesco Municipal and Invesco Low
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Low 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 Invesco Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Municipal Income and Invesco Low Volatility, you can compare the effects of market volatilities on Invesco Municipal and Invesco Low 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 Invesco Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Low.
Diversification Opportunities for Invesco Municipal and Invesco Low
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Invesco and Invesco is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Invesco Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Low Volatility 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 Income are associated (or correlated) with Invesco Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Low Volatility has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Low go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Low
Assuming the 90 days horizon Invesco Municipal Income is expected to generate 0.4 times more return on investment than Invesco Low. However, Invesco Municipal Income is 2.49 times less risky than Invesco Low. It trades about -0.05 of its potential returns per unit of risk. Invesco Low Volatility is currently generating about -0.03 per unit of risk. If you would invest 1,208 in Invesco Municipal Income on December 4, 2024 and sell it today you would lose (10.00) from holding Invesco Municipal Income or give up 0.83% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Invesco Municipal Income vs. Invesco Low Volatility
Performance |
Timeline |
Invesco Municipal Income |
Invesco Low Volatility |
Invesco Municipal and Invesco Low Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Invesco Municipal and Invesco Low
The main advantage of trading using opposite Invesco Municipal and Invesco Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Low 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 Low will offset losses from the drop in Invesco Low's long position.Invesco Municipal vs. Blackrock Global Longshort | Invesco Municipal vs. Old Westbury Short Term | Invesco Municipal vs. Alpine Ultra Short | Invesco Municipal vs. Delaware Investments Ultrashort |
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Check out your portfolio center.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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