Correlation Between Barings Emerging and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Barings Emerging 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 Barings Emerging and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Emerging Markets and Invesco Municipal Income, you can compare the effects of market volatilities on Barings Emerging 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 Barings Emerging with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Invesco Municipal.
Diversification Opportunities for Barings Emerging and Invesco Municipal
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Invesco is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets 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 Barings Emerging 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 Barings Emerging Markets 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 Barings Emerging i.e., Barings Emerging and Invesco Municipal go up and down completely randomly.
Pair Corralation between Barings Emerging and Invesco Municipal
Assuming the 90 days horizon Barings Emerging is expected to generate 1.02 times less return on investment than Invesco Municipal. In addition to that, Barings Emerging is 1.41 times more volatile than Invesco Municipal Income. It trades about 0.08 of its total potential returns per unit of risk. Invesco Municipal Income is currently generating about 0.11 per unit of volatility. If you would invest 1,169 in Invesco Municipal Income on September 3, 2024 and sell it today you would earn a total of 46.00 from holding Invesco Municipal Income or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Emerging Markets vs. Invesco Municipal Income
Performance |
| Timeline |
| Barings Emerging Markets |
| Invesco Municipal Income |
Barings Emerging and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Invesco Municipal
The main advantage of trading using opposite Barings Emerging and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging 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.| Barings Emerging vs. Ab Small Cap | Barings Emerging vs. Ab Small Cap | Barings Emerging vs. Oklahoma College Savings | Barings Emerging vs. Champlain Small |
| Invesco Municipal vs. The Hartford Emerging | Invesco Municipal vs. Barings Emerging Markets | Invesco Municipal vs. Artisan Emerging Markets | Invesco Municipal vs. Oklahoma College Savings |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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