Correlation Between Ishares Municipal and Invesco High
Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Invesco High 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 Ishares Municipal and Invesco High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares Municipal Bond and Invesco High Yield, you can compare the effects of market volatilities on Ishares Municipal and Invesco High 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 Ishares Municipal with a short position of Invesco High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Invesco High.
Diversification Opportunities for Ishares Municipal and Invesco High
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and Invesco is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Invesco High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco High Yield and Ishares 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 Ishares Municipal Bond are associated (or correlated) with Invesco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco High Yield has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Invesco High go up and down completely randomly.
Pair Corralation between Ishares Municipal and Invesco High
Assuming the 90 days horizon Ishares Municipal is expected to generate 2.15 times less return on investment than Invesco High. But when comparing it to its historical volatility, Ishares Municipal Bond is 1.35 times less risky than Invesco High. It trades about 0.06 of its potential returns per unit of risk. Invesco High Yield is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 308.00 in Invesco High Yield on September 4, 2024 and sell it today you would earn a total of 52.00 from holding Invesco High Yield or generate 16.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ishares Municipal Bond vs. Invesco High Yield
Performance |
| Timeline |
| Ishares Municipal Bond |
| Invesco High Yield |
Ishares Municipal and Invesco High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Invesco High
The main advantage of trading using opposite Ishares Municipal and Invesco High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Invesco High 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 High will offset losses from the drop in Invesco High's long position.| Ishares Municipal vs. Growth Strategy Fund | Ishares Municipal vs. Scharf Global Opportunity | Ishares Municipal vs. Principal Lifetime Hybrid | Ishares Municipal vs. T Rowe Price |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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