Correlation Between Invesco Municipal and Fidelity Managed
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Fidelity Managed 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 Fidelity Managed 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 Fidelity Managed Retirement, you can compare the effects of market volatilities on Invesco Municipal and Fidelity Managed 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 Fidelity Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Fidelity Managed.
Diversification Opportunities for Invesco Municipal and Fidelity Managed
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Fidelity is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Fidelity Managed Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Managed Ret 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 Fidelity Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Managed Ret has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Fidelity Managed go up and down completely randomly.
Pair Corralation between Invesco Municipal and Fidelity Managed
Assuming the 90 days horizon Invesco Municipal Income is expected to under-perform the Fidelity Managed. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco Municipal Income is 1.17 times less risky than Fidelity Managed. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Fidelity Managed Retirement is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 5,432 in Fidelity Managed Retirement on September 26, 2024 and sell it today you would lose (28.00) from holding Fidelity Managed Retirement or give up 0.52% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Invesco Municipal Income vs. Fidelity Managed Retirement
Performance |
Timeline |
Invesco Municipal Income |
Fidelity Managed Ret |
Invesco Municipal and Fidelity Managed Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Invesco Municipal and Fidelity Managed
The main advantage of trading using opposite Invesco Municipal and Fidelity Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Fidelity Managed 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 Fidelity Managed will offset losses from the drop in Fidelity Managed's long position.Invesco Municipal vs. Fidelity Managed Retirement | Invesco Municipal vs. Calvert Moderate Allocation | Invesco Municipal vs. Sa Worldwide Moderate | Invesco Municipal vs. College Retirement Equities |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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