Correlation Between Leverage Shares and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and Invesco Municipal 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 Leverage Shares and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leverage Shares 3x and Invesco Municipal Bond, you can compare the effects of market volatilities on Leverage Shares and Invesco Municipal 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 Leverage Shares with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Invesco Municipal.
Diversification Opportunities for Leverage Shares and Invesco Municipal
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Leverage and Invesco is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and Invesco Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Bond and Leverage Shares 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 Leverage Shares 3x are associated (or correlated) with Invesco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Municipal Bond has no effect on the direction of Leverage Shares i.e., Leverage Shares and Invesco Municipal go up and down completely randomly.
Pair Corralation between Leverage Shares and Invesco Municipal
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 52.08 times more return on investment than Invesco Municipal. However, Leverage Shares is 52.08 times more volatile than Invesco Municipal Bond. It trades about 0.29 of its potential returns per unit of risk. Invesco Municipal Bond is currently generating about 0.29 per unit of risk. If you would invest 95,165 in Leverage Shares 3x on September 1, 2024 and sell it today you would earn a total of 167,130 from holding Leverage Shares 3x or generate 175.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Leverage Shares 3x vs. Invesco Municipal Bond
Performance |
| Timeline |
| Leverage Shares 3x |
| Invesco Municipal Bond |
Leverage Shares and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and Invesco Municipal
The main advantage of trading using opposite Leverage Shares and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, Invesco Municipal 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 Municipal will offset losses from the drop in Invesco Municipal's long position.| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
| Invesco Municipal vs. Invesco MSCI Emerging | Invesco Municipal vs. Invesco EURO STOXX | Invesco Municipal vs. Invesco Markets Plc | Invesco Municipal vs. Invesco FTSE RAFI |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |