Correlation Between Invesco MSCI and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco MSCI 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 MSCI 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 MSCI Emerging and Invesco Municipal Bond, you can compare the effects of market volatilities on Invesco MSCI 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 MSCI with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco MSCI and Invesco Municipal.
Diversification Opportunities for Invesco MSCI and Invesco Municipal
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Invesco and Invesco is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Invesco MSCI Emerging and Invesco Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Bond and Invesco MSCI 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 MSCI Emerging 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 Bond has no effect on the direction of Invesco MSCI i.e., Invesco MSCI and Invesco Municipal go up and down completely randomly.
Pair Corralation between Invesco MSCI and Invesco Municipal
Assuming the 90 days trading horizon Invesco MSCI Emerging is expected to under-perform the Invesco Municipal. In addition to that, Invesco MSCI is 1.58 times more volatile than Invesco Municipal Bond. It trades about -0.07 of its total potential returns per unit of risk. Invesco Municipal Bond is currently generating about 0.29 per unit of volatility. If you would invest 249,800 in Invesco Municipal Bond on September 1, 2024 and sell it today you would earn a total of 7,000 from holding Invesco Municipal Bond or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco MSCI Emerging vs. Invesco Municipal Bond
Performance |
| Timeline |
| Invesco MSCI Emerging |
| Invesco Municipal Bond |
Invesco MSCI and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco MSCI and Invesco Municipal
The main advantage of trading using opposite Invesco MSCI and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco MSCI 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 MSCI vs. Invesco EURO STOXX | Invesco MSCI vs. Invesco Markets Plc | Invesco MSCI vs. Invesco FTSE RAFI | Invesco MSCI vs. Invesco FTSE Emerging |
| Invesco Municipal vs. Invesco MSCI Emerging | Invesco Municipal vs. Invesco EURO STOXX | Invesco Municipal vs. Invesco Markets Plc | Invesco Municipal vs. Invesco FTSE RAFI |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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