Correlation Between Invesco European and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco European 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 Invesco European and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco European Growth and Invesco Municipal Income, you can compare the effects of market volatilities on Invesco European 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 Invesco European with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco European and Invesco Municipal.
Diversification Opportunities for Invesco European and Invesco Municipal
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Invesco and Invesco is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Invesco European Growth 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 Invesco European 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 European Growth 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 Invesco European i.e., Invesco European and Invesco Municipal go up and down completely randomly.
Pair Corralation between Invesco European and Invesco Municipal
Assuming the 90 days horizon Invesco European Growth is expected to under-perform the Invesco Municipal. In addition to that, Invesco European is 2.64 times more volatile than Invesco Municipal Income. It trades about -0.1 of its total potential returns per unit of risk. Invesco Municipal Income is currently generating about 0.18 per unit of volatility. If you would invest 1,196 in Invesco Municipal Income on September 1, 2024 and sell it today you would earn a total of 15.00 from holding Invesco Municipal Income or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Invesco European Growth vs. Invesco Municipal Income
Performance |
| Timeline |
| Invesco European Growth |
| Invesco Municipal Income |
Invesco European and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco European and Invesco Municipal
The main advantage of trading using opposite Invesco European and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco European 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.| Invesco European vs. Prudential Health Sciences | Invesco European vs. Live Oak Health | Invesco European vs. The Hartford Healthcare | Invesco European vs. Health Biotchnology Portfolio |
| Invesco Municipal vs. Pioneer High Yield | Invesco Municipal vs. Needham Aggressive Growth | Invesco Municipal vs. Federated Institutional High | Invesco Municipal vs. Morningstar Aggressive Growth |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |