Correlation Between Invesco Municipal and Invesco FTSE
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco FTSE 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 Municipal and Invesco FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Municipal Bond and Invesco FTSE Emerging, you can compare the effects of market volatilities on Invesco Municipal and Invesco FTSE 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 Municipal with a short position of Invesco FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco FTSE.
Diversification Opportunities for Invesco Municipal and Invesco FTSE
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invesco and Invesco is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Bond and Invesco FTSE Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco FTSE Emerging and Invesco Municipal 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 Municipal Bond are associated (or correlated) with Invesco FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco FTSE Emerging has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco FTSE go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco FTSE
Assuming the 90 days trading horizon Invesco Municipal Bond is expected to generate 0.46 times more return on investment than Invesco FTSE. However, Invesco Municipal Bond is 2.18 times less risky than Invesco FTSE. It trades about 0.42 of its potential returns per unit of risk. Invesco FTSE Emerging is currently generating about -0.19 per unit of risk. If you would invest 246,925 in Invesco Municipal Bond on August 28, 2024 and sell it today you would earn a total of 10,725 from holding Invesco Municipal Bond or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Bond vs. Invesco FTSE Emerging
Performance |
| Timeline |
| Invesco Municipal Bond |
| Invesco FTSE Emerging |
Invesco Municipal and Invesco FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco FTSE
The main advantage of trading using opposite Invesco Municipal and Invesco FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco FTSE 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 FTSE will offset losses from the drop in Invesco FTSE's long position.| Invesco Municipal vs. Leverage Shares 3x | Invesco Municipal vs. WisdomTree SP 500 | Invesco Municipal vs. WisdomTree Silver 3x | Invesco Municipal vs. Leverage Shares 3x |
| Invesco FTSE vs. Leverage Shares 3x | Invesco FTSE vs. Leverage Shares 3x | Invesco FTSE vs. Leverage Shares 3x | Invesco FTSE vs. WisdomTree Short GBP |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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