Correlation Between Invesco Energy and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco Energy 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 Energy 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 Energy Fund and Invesco Municipal Income, you can compare the effects of market volatilities on Invesco Energy 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 Energy with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Energy and Invesco Municipal.
Diversification Opportunities for Invesco Energy and Invesco Municipal
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Invesco and Invesco is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Energy Fund 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 Energy 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 Energy Fund 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 Energy i.e., Invesco Energy and Invesco Municipal go up and down completely randomly.
Pair Corralation between Invesco Energy and Invesco Municipal
Assuming the 90 days horizon Invesco Energy is expected to generate 2.03 times less return on investment than Invesco Municipal. In addition to that, Invesco Energy is 4.69 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 0.13 per unit of volatility. If you would invest 1,163 in Invesco Municipal Income on August 29, 2024 and sell it today you would earn a total of 46.00 from holding Invesco Municipal Income or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Energy Fund vs. Invesco Municipal Income
Performance |
| Timeline |
| Invesco Energy |
| Invesco Municipal Income |
Invesco Energy and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Energy and Invesco Municipal
The main advantage of trading using opposite Invesco Energy and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Energy 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 Energy vs. Guinness Atkinson Alternative | Invesco Energy vs. Firsthand Alternative Energy | Invesco Energy vs. Goldman Sachs Mlp | Invesco Energy vs. Dreyfus Natural Resources |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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