Correlation Between High-yield Municipal and Invesco Preferred
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Invesco Preferred 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 High-yield Municipal and Invesco Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and Invesco Preferred ETF, you can compare the effects of market volatilities on High-yield Municipal and Invesco Preferred 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 High-yield Municipal with a short position of Invesco Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Invesco Preferred.
Diversification Opportunities for High-yield Municipal and Invesco Preferred
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between High-yield and Invesco is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Invesco Preferred ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Preferred ETF and High-yield 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 High Yield Municipal Fund are associated (or correlated) with Invesco Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Preferred ETF has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Invesco Preferred go up and down completely randomly.
Pair Corralation between High-yield Municipal and Invesco Preferred
Assuming the 90 days horizon High-yield Municipal is expected to generate 1.47 times less return on investment than Invesco Preferred. But when comparing it to its historical volatility, High Yield Municipal Fund is 2.7 times less risky than Invesco Preferred. It trades about 0.07 of its potential returns per unit of risk. Invesco Preferred ETF is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,041 in Invesco Preferred ETF on August 29, 2024 and sell it today you would earn a total of 152.00 from holding Invesco Preferred ETF or generate 14.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Invesco Preferred ETF
Performance |
| Timeline |
| High Yield Municipal |
| Invesco Preferred ETF |
High-yield Municipal and Invesco Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and Invesco Preferred
The main advantage of trading using opposite High-yield Municipal and Invesco Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Invesco Preferred 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 Preferred will offset losses from the drop in Invesco Preferred's long position.| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
| Invesco Preferred vs. iShares Preferred and | Invesco Preferred vs. First Trust Preferred | Invesco Preferred vs. Global X Preferred | Invesco Preferred vs. Invesco Variable Rate |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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