Correlation Between Nuveen Mortgage and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Nuveen Mortgage 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 Nuveen Mortgage and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Mortgage Opportunity and Invesco Municipal Opportunity, you can compare the effects of market volatilities on Nuveen Mortgage 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 Nuveen Mortgage with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Mortgage and Invesco Municipal.
Diversification Opportunities for Nuveen Mortgage and Invesco Municipal
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nuveen and Invesco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Mortgage Opportunity and Invesco Municipal Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal and Nuveen Mortgage 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 Nuveen Mortgage Opportunity 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 has no effect on the direction of Nuveen Mortgage i.e., Nuveen Mortgage and Invesco Municipal go up and down completely randomly.
Pair Corralation between Nuveen Mortgage and Invesco Municipal
Considering the 90-day investment horizon Nuveen Mortgage Opportunity is expected to generate 0.81 times more return on investment than Invesco Municipal. However, Nuveen Mortgage Opportunity is 1.24 times less risky than Invesco Municipal. It trades about 0.19 of its potential returns per unit of risk. Invesco Municipal Opportunity is currently generating about -0.1 per unit of risk. If you would invest 1,790 in Nuveen Mortgage Opportunity on September 18, 2024 and sell it today you would earn a total of 41.00 from holding Nuveen Mortgage Opportunity or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Mortgage Opportunity vs. Invesco Municipal Opportunity
Performance |
| Timeline |
| Nuveen Mortgage Oppo |
| Invesco Municipal |
Nuveen Mortgage and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Mortgage and Invesco Municipal
The main advantage of trading using opposite Nuveen Mortgage and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Mortgage 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.| Nuveen Mortgage vs. Brandywineglobal Globalome Opportunities | Nuveen Mortgage vs. RiverNorth Specialty Finance | Nuveen Mortgage vs. Western Asset Mortgage | Nuveen Mortgage vs. Stone Harbor Emerging |
| Invesco Municipal vs. Invesco Quality Municipal | Invesco Municipal vs. Invesco Advantage MIT | Invesco Municipal vs. Invesco Municipal Trust | Invesco Municipal vs. Invesco California Value |
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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