Correlation Between Invesco Technology and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco Technology and Ab 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 Technology and Ab Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Technology Fund and Ab Municipal Bond, you can compare the effects of market volatilities on Invesco Technology and Ab 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 Technology with a short position of Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Technology and Ab Municipal.
Diversification Opportunities for Invesco Technology and Ab Municipal
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and AUNCX is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Technology Fund and Ab Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Municipal Bond and Invesco Technology 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 Technology Fund are associated (or correlated) with Ab Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Municipal Bond has no effect on the direction of Invesco Technology i.e., Invesco Technology and Ab Municipal go up and down completely randomly.
Pair Corralation between Invesco Technology and Ab Municipal
Assuming the 90 days horizon Invesco Technology is expected to generate 44.43 times less return on investment than Ab Municipal. In addition to that, Invesco Technology is 16.29 times more volatile than Ab Municipal Bond. It trades about 0.0 of its total potential returns per unit of risk. Ab Municipal Bond is currently generating about 0.24 per unit of volatility. If you would invest 1,070 in Ab Municipal Bond on November 7, 2024 and sell it today you would earn a total of 6.00 from holding Ab Municipal Bond or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Invesco Technology Fund vs. Ab Municipal Bond
Performance |
| Timeline |
| Invesco Technology |
| Ab Municipal Bond |
Invesco Technology and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Technology and Ab Municipal
The main advantage of trading using opposite Invesco Technology and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Technology position performs unexpectedly, Ab 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 Ab Municipal will offset losses from the drop in Ab Municipal's long position.The idea behind Invesco Technology Fund and Ab Municipal Bond 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.
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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 CEOs Directory module to screen CEOs from public companies around the world.
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