Correlation Between Invesco Core and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco Core 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 Core 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 E Plus and Invesco Municipal Income, you can compare the effects of market volatilities on Invesco Core 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 Core with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Core and Invesco Municipal.
Diversification Opportunities for Invesco Core and Invesco Municipal
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Invesco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Invesco E Plus 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 Core 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 E Plus 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 Core i.e., Invesco Core and Invesco Municipal go up and down completely randomly.
Pair Corralation between Invesco Core and Invesco Municipal
Assuming the 90 days horizon Invesco Core is expected to generate 1.42 times less return on investment than Invesco Municipal. But when comparing it to its historical volatility, Invesco E Plus is 1.14 times less risky than Invesco Municipal. It trades about 0.13 of its potential returns per unit of risk. Invesco Municipal Income is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,204 in Invesco Municipal Income on September 3, 2024 and sell it today you would earn a total of 13.00 from holding Invesco Municipal Income or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco E Plus vs. Invesco Municipal Income
Performance |
| Timeline |
| Invesco E Plus |
| Invesco Municipal Income |
Invesco Core and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Core and Invesco Municipal
The main advantage of trading using opposite Invesco Core and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Core 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 Core vs. Hood River New | Invesco Core vs. John Hancock Funds | Invesco Core vs. T Rowe Price | Invesco Core vs. T Rowe Price |
| Invesco Municipal vs. Touchstone Large Cap | Invesco Municipal vs. T Rowe Price | Invesco Municipal vs. Qs Global Equity | Invesco Municipal vs. William Blair Large |
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.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |