Correlation Between Invesco Municipal and Nuveen Global

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

By analyzing existing cross correlation between Invesco Municipal Opportunity and Nuveen Global High, you can compare the effects of market volatilities on Invesco Municipal and Nuveen Global 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 Nuveen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Nuveen Global.

Diversification Opportunities for Invesco Municipal and Nuveen Global

0.62

Correlation Coefficient

Invesco Municipal  Nuveen Global

Poor diversification

The 3 months correlation between Invesco and Nuveen is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Opportunity and Nuveen Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Global High 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 Opportunity are associated (or correlated) with Nuveen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Global High has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Nuveen Global go up and down completely randomly.

Pair Corralation between Invesco Municipal and Nuveen Global

Considering the 90-day investment horizon Invesco Municipal Opportunity is expected to under-perform the Nuveen Global. In addition to that, Invesco Municipal is 1.26 times more volatile than Nuveen Global High. It trades about -0.24 of its total potential returns per unit of risk. Nuveen Global High is currently generating about -0.23 per unit of volatility. If you would invest  1,323  in Nuveen Global High on October 14, 2024 and sell it today you would lose (32.00) from holding Nuveen Global High or give up 2.42% of portfolio value over 90 days.

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

Invesco Municipal Opportunity  vs.  Nuveen Global High

Invesco Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Municipal Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Invesco Municipal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Nuveen Global High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Global High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Nuveen Global is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Invesco Municipal and Nuveen Global

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

The idea behind Invesco Municipal Opportunity and Nuveen Global High 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.