Correlation Between Aam Select and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Aam Select 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 Aam Select and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aam Select Income and Invesco Municipal Income, you can compare the effects of market volatilities on Aam Select 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 Aam Select with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam Select and Invesco Municipal.
Diversification Opportunities for Aam Select and Invesco Municipal
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aam and Invesco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Aam Select Income 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 Aam Select 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 Aam Select Income 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 Aam Select i.e., Aam Select and Invesco Municipal go up and down completely randomly.
Pair Corralation between Aam Select and Invesco Municipal
Assuming the 90 days horizon Aam Select Income is expected to generate 1.5 times more return on investment than Invesco Municipal. However, Aam Select is 1.5 times more volatile than Invesco Municipal Income. It trades about 0.25 of its potential returns per unit of risk. Invesco Municipal Income is currently generating about 0.14 per unit of risk. If you would invest 911.00 in Aam Select Income on December 4, 2024 and sell it today you would earn a total of 17.00 from holding Aam Select Income or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aam Select Income vs. Invesco Municipal Income
Performance |
| Timeline |
| Aam Select Income |
| Invesco Municipal Income |
Aam Select and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aam Select and Invesco Municipal
The main advantage of trading using opposite Aam Select and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aam Select 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.| Aam Select vs. Fidelity Advisor Financial | Aam Select vs. Rmb Mendon Financial | Aam Select vs. 1919 Financial Services | Aam Select vs. Prudential Financial Services |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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