Correlation Between Invesco Pennsylvania and Bny Mellon

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

By analyzing existing cross correlation between Invesco Pennsylvania Value and Bny Mellon Municipalome, you can compare the effects of market volatilities on Invesco Pennsylvania and Bny Mellon 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 Pennsylvania with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Pennsylvania and Bny Mellon.

Diversification Opportunities for Invesco Pennsylvania and Bny Mellon

0.62

Correlation Coefficient

Invesco Pennsylvania  Bny Mellon

Poor diversification

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

Pair Corralation between Invesco Pennsylvania and Bny Mellon

Considering the 90-day investment horizon Invesco Pennsylvania Value is expected to generate 0.85 times more return on investment than Bny Mellon. However, Invesco Pennsylvania Value is 1.18 times less risky than Bny Mellon. It trades about 0.19 of its potential returns per unit of risk. Bny Mellon Municipalome is currently generating about 0.14 per unit of risk. If you would invest  1,010  in Invesco Pennsylvania Value on September 3, 2024 and sell it today you would earn a total of  121.00  from holding Invesco Pennsylvania Value or generate 11.98% return on investment over 90 days.

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

Invesco Pennsylvania Value  vs.  Bny Mellon Municipalome

Invesco Pennsylvania

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Pennsylvania Value are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Invesco Pennsylvania is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Bny Mellon Municipalome

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bny Mellon Municipalome are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Bny Mellon is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Invesco Pennsylvania and Bny Mellon

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

The idea behind Invesco Pennsylvania Value and Bny Mellon Municipalome 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.