Correlation Between Hartford Municipal and Invesco National
Can any of the company-specific risk be diversified away by investing in both Hartford Municipal and Invesco National 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 Hartford Municipal and Invesco National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartford Municipal Opportunities and Invesco National AMT Free, you can compare the effects of market volatilities on Hartford Municipal and Invesco National 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 Hartford Municipal with a short position of Invesco National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Municipal and Invesco National.
Diversification Opportunities for Hartford Municipal and Invesco National
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hartford and Invesco is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Municipal Opportuniti and Invesco National AMT Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco National AMT and Hartford Municipal 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 Hartford Municipal Opportunities are associated (or correlated) with Invesco National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco National AMT has no effect on the direction of Hartford Municipal i.e., Hartford Municipal and Invesco National go up and down completely randomly.
Pair Corralation between Hartford Municipal and Invesco National
Given the investment horizon of 90 days Hartford Municipal is expected to generate 1.95 times less return on investment than Invesco National. But when comparing it to its historical volatility, Hartford Municipal Opportunities is 1.73 times less risky than Invesco National. It trades about 0.07 of its potential returns per unit of risk. Invesco National AMT Free is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,367 in Invesco National AMT Free on August 27, 2024 and sell it today you would earn a total of 20.00 from holding Invesco National AMT Free or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hartford Municipal Opportuniti vs. Invesco National AMT Free
Performance |
| Timeline |
| Hartford Municipal |
| Invesco National AMT |
Hartford Municipal and Invesco National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Municipal and Invesco National
The main advantage of trading using opposite Hartford Municipal and Invesco National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Municipal position performs unexpectedly, Invesco National 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 National will offset losses from the drop in Invesco National's long position.| Hartford Municipal vs. IQ MacKay Municipal | Hartford Municipal vs. IQ MacKay Municipal | Hartford Municipal vs. Franklin Liberty Federal | Hartford Municipal vs. Franklin Liberty Intermediate |
| Invesco National vs. Franklin Liberty Intermediate | Invesco National vs. Hartford Municipal Opportunities | Invesco National vs. IQ MacKay Municipal |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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