Correlation Between Cisco Systems and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Cisco Systems 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 Cisco Systems and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Invesco Municipal Income, you can compare the effects of market volatilities on Cisco Systems 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 Cisco Systems with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Invesco Municipal.
Diversification Opportunities for Cisco Systems and Invesco Municipal
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and Invesco is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems 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 Cisco Systems 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 Cisco Systems 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 Cisco Systems i.e., Cisco Systems and Invesco Municipal go up and down completely randomly.
Pair Corralation between Cisco Systems and Invesco Municipal
Given the investment horizon of 90 days Cisco Systems is expected to generate 8.38 times less return on investment than Invesco Municipal. In addition to that, Cisco Systems is 4.11 times more volatile than Invesco Municipal Income. It trades about 0.01 of its total potential returns per unit of risk. Invesco Municipal Income is currently generating about 0.42 per unit of volatility. If you would invest 645.00 in Invesco Municipal Income on September 12, 2024 and sell it today you would earn a total of 12.00 from holding Invesco Municipal Income or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cisco Systems vs. Invesco Municipal Income
Performance |
| Timeline |
| Cisco Systems |
| Invesco Municipal Income |
Cisco Systems and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Invesco Municipal
The main advantage of trading using opposite Cisco Systems and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems 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.| Cisco Systems vs. Victory Integrity Smallmid Cap | Cisco Systems vs. Hilton Worldwide Holdings | Cisco Systems vs. NVIDIA | Cisco Systems vs. JPMorgan Chase Co |
| Invesco Municipal vs. Barings Emerging Markets | Invesco Municipal vs. T Rowe Price | Invesco Municipal vs. Kinetics Market Opportunities | Invesco Municipal vs. Rbc Emerging Markets |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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