Correlation Between Invesco NASDAQ and High-yield Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco NASDAQ and High-yield 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 NASDAQ and High-yield Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco NASDAQ Internet and High Yield Municipal Fund, you can compare the effects of market volatilities on Invesco NASDAQ and High-yield 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 NASDAQ with a short position of High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco NASDAQ and High-yield Municipal.
Diversification Opportunities for Invesco NASDAQ and High-yield Municipal
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Invesco and High-yield is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Invesco NASDAQ Internet and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and Invesco NASDAQ 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 NASDAQ Internet are associated (or correlated) with High-yield Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of Invesco NASDAQ i.e., Invesco NASDAQ and High-yield Municipal go up and down completely randomly.
Pair Corralation between Invesco NASDAQ and High-yield Municipal
Given the investment horizon of 90 days Invesco NASDAQ Internet is expected to generate 2.55 times more return on investment than High-yield Municipal. However, Invesco NASDAQ is 2.55 times more volatile than High Yield Municipal Fund. It trades about 0.31 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.16 per unit of risk. If you would invest 4,430 in Invesco NASDAQ Internet on August 30, 2024 and sell it today you would earn a total of 297.00 from holding Invesco NASDAQ Internet or generate 6.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco NASDAQ Internet vs. High Yield Municipal Fund
Performance |
| Timeline |
| Invesco NASDAQ Internet |
| High Yield Municipal |
Invesco NASDAQ and High-yield Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco NASDAQ and High-yield Municipal
The main advantage of trading using opposite Invesco NASDAQ and High-yield Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco NASDAQ position performs unexpectedly, High-yield 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 High-yield Municipal will offset losses from the drop in High-yield Municipal's long position.| Invesco NASDAQ vs. First Trust Dow | Invesco NASDAQ vs. First Trust NASDAQ 100 Technology | Invesco NASDAQ vs. Global X Social | Invesco NASDAQ vs. Invesco SP SmallCap |
| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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