Correlation Between Aim Taxexempt and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Aim Taxexempt 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 Aim Taxexempt and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aim Taxexempt Funds and Invesco Municipal Income, you can compare the effects of market volatilities on Aim Taxexempt 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 Aim Taxexempt with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aim Taxexempt and Invesco Municipal.
Diversification Opportunities for Aim Taxexempt and Invesco Municipal
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aim and Invesco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aim Taxexempt Funds 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 Aim Taxexempt 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 Aim Taxexempt Funds 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 Aim Taxexempt i.e., Aim Taxexempt and Invesco Municipal go up and down completely randomly.
Pair Corralation between Aim Taxexempt and Invesco Municipal
Assuming the 90 days horizon Aim Taxexempt is expected to generate 1.23 times less return on investment than Invesco Municipal. But when comparing it to its historical volatility, Aim Taxexempt Funds is 1.45 times less risky than Invesco Municipal. It trades about 0.21 of its potential returns per unit of risk. Invesco Municipal Income is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,196 in Invesco Municipal Income on September 1, 2024 and sell it today you would earn a total of 15.00 from holding Invesco Municipal Income or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aim Taxexempt Funds vs. Invesco Municipal Income
Performance |
| Timeline |
| Aim Taxexempt Funds |
| Invesco Municipal Income |
Aim Taxexempt and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aim Taxexempt and Invesco Municipal
The main advantage of trading using opposite Aim Taxexempt and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aim Taxexempt 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.| Aim Taxexempt vs. Invesco Municipal Income | Aim Taxexempt vs. Invesco Municipal Income | Aim Taxexempt vs. Invesco Municipal Income | Aim Taxexempt vs. Oppenheimer Rising Dividends |
| Invesco Municipal vs. Pioneer High Yield | Invesco Municipal vs. Needham Aggressive Growth | Invesco Municipal vs. Federated Institutional High | Invesco Municipal vs. Morningstar Aggressive Growth |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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