Correlation Between Invesco Municipal and Putnam Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Putnam 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 Invesco Municipal and Putnam Municipal 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 Putnam Municipal Opportunities, you can compare the effects of market volatilities on Invesco Municipal and Putnam 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 Invesco Municipal with a short position of Putnam Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Putnam Municipal.
Diversification Opportunities for Invesco Municipal and Putnam Municipal
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and Putnam is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Putnam Municipal Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Municipal Opp 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 Putnam Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Municipal Opp has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Putnam Municipal go up and down completely randomly.
Pair Corralation between Invesco Municipal and Putnam Municipal
Considering the 90-day investment horizon Invesco Municipal is expected to generate 1.68 times less return on investment than Putnam Municipal. But when comparing it to its historical volatility, Invesco Municipal Income is 1.05 times less risky than Putnam Municipal. It trades about 0.07 of its potential returns per unit of risk. Putnam Municipal Opportunities is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,041 in Putnam Municipal Opportunities on August 29, 2024 and sell it today you would earn a total of 22.00 from holding Putnam Municipal Opportunities or generate 2.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Income vs. Putnam Municipal Opportunities
Performance |
| Timeline |
| Invesco Municipal Income |
| Putnam Municipal Opp |
Invesco Municipal and Putnam Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Putnam Municipal
The main advantage of trading using opposite Invesco Municipal and Putnam Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Putnam 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 Putnam Municipal will offset losses from the drop in Putnam Municipal'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 |
| Putnam Municipal vs. Invesco Municipal Income | Putnam Municipal vs. DWS Municipal Income | Putnam Municipal vs. MFS Municipal Income | Putnam 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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