Correlation Between Ab Bond and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Ab Bond 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 Ab Bond and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Bond Inflation and Invesco Municipal Income, you can compare the effects of market volatilities on Ab Bond 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 Ab Bond with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Invesco Municipal.
Diversification Opportunities for Ab Bond and Invesco Municipal
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ABNCX and Invesco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Invesco Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Income and Ab Bond 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 Ab Bond Inflation 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 Income has no effect on the direction of Ab Bond i.e., Ab Bond and Invesco Municipal go up and down completely randomly.
Pair Corralation between Ab Bond and Invesco Municipal
Assuming the 90 days horizon Ab Bond is expected to generate 5.61 times less return on investment than Invesco Municipal. But when comparing it to its historical volatility, Ab Bond Inflation is 1.51 times less risky than Invesco Municipal. It trades about 0.02 of its potential returns per unit of risk. Invesco Municipal Income is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,201 in Invesco Municipal Income on September 2, 2024 and sell it today you would earn a total of 14.00 from holding Invesco Municipal Income or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Bond Inflation vs. Invesco Municipal Income
Performance |
| Timeline |
| Ab Bond Inflation |
| Invesco Municipal Income |
Ab Bond and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Bond and Invesco Municipal
The main advantage of trading using opposite Ab Bond and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond 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.| Ab Bond vs. T Rowe Price | Ab Bond vs. Dws Government Money | Ab Bond vs. American Century Investment | Ab Bond vs. Aim Investment Secs |
| Invesco Municipal vs. Blackrock Financial Institutions | Invesco Municipal vs. Angel Oak Financial | Invesco Municipal vs. Davis Financial Fund | Invesco Municipal vs. Gabelli Global Financial |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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