Correlation Between Loews Corp and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Loews Corp 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 Loews Corp and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loews Corp and Invesco Municipal Trust, you can compare the effects of market volatilities on Loews Corp 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 Loews Corp with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loews Corp and Invesco Municipal.
Diversification Opportunities for Loews Corp and Invesco Municipal
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Loews and Invesco is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and Invesco Municipal Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Trust and Loews Corp 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 Loews Corp 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 Trust has no effect on the direction of Loews Corp i.e., Loews Corp and Invesco Municipal go up and down completely randomly.
Pair Corralation between Loews Corp and Invesco Municipal
Taking into account the 90-day investment horizon Loews Corp is expected to generate 2.28 times more return on investment than Invesco Municipal. However, Loews Corp is 2.28 times more volatile than Invesco Municipal Trust. It trades about 0.1 of its potential returns per unit of risk. Invesco Municipal Trust is currently generating about 0.14 per unit of risk. If you would invest 7,575 in Loews Corp on September 1, 2024 and sell it today you would earn a total of 1,098 from holding Loews Corp or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loews Corp vs. Invesco Municipal Trust
Performance |
| Timeline |
| Loews Corp |
| Invesco Municipal Trust |
Loews Corp and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loews Corp and Invesco Municipal
The main advantage of trading using opposite Loews Corp and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loews Corp 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.| Loews Corp vs. Horace Mann Educators | Loews Corp vs. Global Indemnity PLC | Loews Corp vs. Selective Insurance Group | Loews Corp vs. Kemper |
| Invesco Municipal vs. Visa Class A | Invesco Municipal vs. Diamond Hill Investment | Invesco Municipal vs. Distoken Acquisition | Invesco Municipal vs. Associated Capital Group |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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