Correlation Between Invesco International and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco International 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 International 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 International Small and Invesco Municipal Income, you can compare the effects of market volatilities on Invesco International 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 International with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco International and Invesco Municipal.
Diversification Opportunities for Invesco International and Invesco Municipal
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Invesco and Invesco is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Invesco International Small 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 International 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 International Small 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 International i.e., Invesco International and Invesco Municipal go up and down completely randomly.
Pair Corralation between Invesco International and Invesco Municipal
Assuming the 90 days horizon Invesco International Small is expected to generate 2.49 times more return on investment than Invesco Municipal. However, Invesco International is 2.49 times more volatile than Invesco Municipal Income. It trades about 0.04 of its potential returns per unit of risk. Invesco Municipal Income is currently generating about 0.07 per unit of risk. If you would invest 1,784 in Invesco International Small on September 4, 2024 and sell it today you would earn a total of 254.00 from holding Invesco International Small or generate 14.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco International Small vs. Invesco Municipal Income
Performance |
| Timeline |
| Invesco International |
| Invesco Municipal Income |
Invesco International and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco International and Invesco Municipal
The main advantage of trading using opposite Invesco International and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco International 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.The idea behind Invesco International Small and Invesco Municipal Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Invesco Municipal vs. Dreyfus Government Cash | Invesco Municipal vs. Prudential Government Income | Invesco Municipal vs. Inverse Government Long | Invesco Municipal vs. Lord Abbett Government |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |