Correlation Between Ally Financial and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Ally Financial 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 Ally Financial and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Invesco Municipal Trust, you can compare the effects of market volatilities on Ally Financial 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 Ally Financial with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Invesco Municipal.
Diversification Opportunities for Ally Financial and Invesco Municipal
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ally and Invesco is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Invesco Municipal Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Trust and Ally Financial 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 Ally Financial 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 Trust has no effect on the direction of Ally Financial i.e., Ally Financial and Invesco Municipal go up and down completely randomly.
Pair Corralation between Ally Financial and Invesco Municipal
Given the investment horizon of 90 days Ally Financial is expected to generate 3.09 times more return on investment than Invesco Municipal. However, Ally Financial is 3.09 times more volatile than Invesco Municipal Trust. It trades about 0.29 of its potential returns per unit of risk. Invesco Municipal Trust is currently generating about 0.17 per unit of risk. If you would invest 3,425 in Ally Financial on September 4, 2024 and sell it today you would earn a total of 486.00 from holding Ally Financial or generate 14.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ally Financial vs. Invesco Municipal Trust
Performance |
| Timeline |
| Ally Financial |
| Invesco Municipal Trust |
Ally Financial and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and Invesco Municipal
The main advantage of trading using opposite Ally Financial and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial 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.| Ally Financial vs. American Express | Ally Financial vs. Mastercard | Ally Financial vs. Visa Class A | Ally Financial vs. PayPal Holdings |
| Invesco Municipal vs. Invesco Trust For | Invesco Municipal vs. Invesco Quality Municipal | Invesco Municipal vs. Invesco Municipal Opportunity | Invesco Municipal vs. MFS High Income |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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