Correlation Between OFS Capital and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both OFS Capital 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 OFS Capital and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OFS Capital Corp and Invesco Municipal Trust, you can compare the effects of market volatilities on OFS Capital 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 OFS Capital with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFS Capital and Invesco Municipal.
Diversification Opportunities for OFS Capital and Invesco Municipal
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OFS and Invesco is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding OFS Capital 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 OFS Capital 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 OFS Capital 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 OFS Capital i.e., OFS Capital and Invesco Municipal go up and down completely randomly.
Pair Corralation between OFS Capital and Invesco Municipal
Considering the 90-day investment horizon OFS Capital Corp is expected to under-perform the Invesco Municipal. But the stock apears to be less risky and, when comparing its historical volatility, OFS Capital Corp is 1.05 times less risky than Invesco Municipal. The stock trades about -0.03 of its potential returns per unit of risk. The Invesco Municipal Trust is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 992.00 in Invesco Municipal Trust on August 28, 2024 and sell it today you would earn a total of 5.00 from holding Invesco Municipal Trust or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OFS Capital Corp vs. Invesco Municipal Trust
Performance |
| Timeline |
| OFS Capital Corp |
| Invesco Municipal Trust |
OFS Capital and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OFS Capital and Invesco Municipal
The main advantage of trading using opposite OFS Capital and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFS Capital 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.| OFS Capital vs. Stellus Capital Investment | OFS Capital vs. Fidus Investment Corp | OFS Capital vs. Monroe Capital Corp | OFS Capital vs. New Mountain Finance |
| Invesco Municipal vs. Invesco Trust For | Invesco Municipal vs. Invesco Quality Municipal | Invesco Municipal vs. Invesco Municipal Opportunity | Invesco Municipal vs. MFS High Income |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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