Correlation Between Invesco Municipal and Sprott Physical
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Sprott Physical 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 Sprott Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Municipal Income and Sprott Physical Gold, you can compare the effects of market volatilities on Invesco Municipal and Sprott Physical 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 Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Sprott Physical.
Diversification Opportunities for Invesco Municipal and Sprott Physical
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and Sprott is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Gold 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 Income are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Sprott Physical go up and down completely randomly.
Pair Corralation between Invesco Municipal and Sprott Physical
Considering the 90-day investment horizon Invesco Municipal Income is expected to generate 0.6 times more return on investment than Sprott Physical. However, Invesco Municipal Income is 1.66 times less risky than Sprott Physical. It trades about -0.04 of its potential returns per unit of risk. Sprott Physical Gold is currently generating about -0.07 per unit of risk. If you would invest 654.00 in Invesco Municipal Income on August 27, 2024 and sell it today you would lose (5.00) from holding Invesco Municipal Income or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Income vs. Sprott Physical Gold
Performance |
| Timeline |
| Invesco Municipal Income |
| Sprott Physical Gold |
Invesco Municipal and Sprott Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Sprott Physical
The main advantage of trading using opposite Invesco Municipal and Sprott Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Sprott Physical 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 Sprott Physical will offset losses from the drop in Sprott Physical's long position.| Invesco Municipal vs. DWS Municipal Income | Invesco Municipal vs. MFS Municipal Income | Invesco Municipal vs. MFS High Income | Invesco Municipal vs. Blackrock Muniyield |
| Sprott Physical vs. Sprott Physical Gold | Sprott Physical vs. Sprott Physical Platinum | Sprott Physical vs. Sprott Inc | Sprott Physical vs. Brookfield Real Assets |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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