Correlation Between Invesco Income and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco Income 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 Income 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 Income Allocation and Invesco Municipal Income, you can compare the effects of market volatilities on Invesco Income 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 Income with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Income and Invesco Municipal.
Diversification Opportunities for Invesco Income and Invesco Municipal
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and Invesco is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Income Allocation 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 Income 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 Income Allocation 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 Income i.e., Invesco Income and Invesco Municipal go up and down completely randomly.
Pair Corralation between Invesco Income and Invesco Municipal
Assuming the 90 days horizon Invesco Income Allocation is expected to generate 1.32 times more return on investment than Invesco Municipal. However, Invesco Income is 1.32 times more volatile than Invesco Municipal Income. It trades about 0.15 of its potential returns per unit of risk. Invesco Municipal Income is currently generating about 0.13 per unit of risk. If you would invest 1,016 in Invesco Income Allocation on August 29, 2024 and sell it today you would earn a total of 62.00 from holding Invesco Income Allocation or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Income Allocation vs. Invesco Municipal Income
Performance |
| Timeline |
| Invesco Income Allocation |
| Invesco Municipal Income |
Invesco Income and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Income and Invesco Municipal
The main advantage of trading using opposite Invesco Income and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Income 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 Income vs. Pace Large Value | Invesco Income vs. Washington Mutual Investors | Invesco Income vs. Goldman Sachs Large | Invesco Income vs. Vanguard Equity Income |
| Invesco Municipal vs. Health Care Fund | Invesco Municipal vs. Prudential Health Sciences | Invesco Municipal vs. Baron Health Care | Invesco Municipal vs. Deutsche Health And |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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