Correlation Between Invesco California and Invesco National
Can any of the company-specific risk be diversified away by investing in both Invesco California and Invesco National 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 California and Invesco National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco California AMT Free and Invesco National AMT Free, you can compare the effects of market volatilities on Invesco California and Invesco National 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 California with a short position of Invesco National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco California and Invesco National.
Diversification Opportunities for Invesco California and Invesco National
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Invesco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Invesco California AMT Free and Invesco National AMT Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco National AMT and Invesco California 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 California AMT Free are associated (or correlated) with Invesco National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco National AMT has no effect on the direction of Invesco California i.e., Invesco California and Invesco National go up and down completely randomly.
Pair Corralation between Invesco California and Invesco National
Considering the 90-day investment horizon Invesco California AMT Free is expected to generate 1.01 times more return on investment than Invesco National. However, Invesco California is 1.01 times more volatile than Invesco National AMT Free. It trades about 0.18 of its potential returns per unit of risk. Invesco National AMT Free is currently generating about 0.16 per unit of risk. If you would invest 2,458 in Invesco California AMT Free on September 1, 2024 and sell it today you would earn a total of 52.00 from holding Invesco California AMT Free or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco California AMT Free vs. Invesco National AMT Free
Performance |
| Timeline |
| Invesco California AMT |
| Invesco National AMT |
Invesco California and Invesco National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco California and Invesco National
The main advantage of trading using opposite Invesco California and Invesco National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco California position performs unexpectedly, Invesco National 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 National will offset losses from the drop in Invesco National's long position.| Invesco California vs. Invesco New York | Invesco California vs. iShares California Muni | Invesco California vs. Invesco VRDO Tax Free | Invesco California vs. Invesco National AMT Free |
| Invesco National vs. VanEck Intermediate Muni | Invesco National vs. VanEck Short Muni | Invesco National vs. SPDR Nuveen Bloomberg | Invesco National vs. Invesco New York |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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