Correlation Between Invesco National and First Trust
Can any of the company-specific risk be diversified away by investing in both Invesco National and First Trust 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 National and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco National AMT Free and First Trust Flexible, you can compare the effects of market volatilities on Invesco National and First Trust 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 National with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco National and First Trust.
Diversification Opportunities for Invesco National and First Trust
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Invesco National AMT Free and First Trust Flexible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Flexible and Invesco National 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 National AMT Free are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Flexible has no effect on the direction of Invesco National i.e., Invesco National and First Trust go up and down completely randomly.
Pair Corralation between Invesco National and First Trust
Considering the 90-day investment horizon Invesco National AMT Free is expected to generate 0.87 times more return on investment than First Trust. However, Invesco National AMT Free is 1.15 times less risky than First Trust. It trades about -0.01 of its potential returns per unit of risk. First Trust Flexible is currently generating about -0.04 per unit of risk. If you would invest 2,347 in Invesco National AMT Free on October 26, 2024 and sell it today you would lose (7.00) from holding Invesco National AMT Free or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco National AMT Free vs. First Trust Flexible
Performance |
| Timeline |
| Invesco National AMT |
| First Trust Flexible |
Invesco National and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco National and First Trust
The main advantage of trading using opposite Invesco National and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco National position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Invesco National vs. SPDR Nuveen Bloomberg | Invesco National vs. VanEck Intermediate Muni | Invesco National vs. VanEck Long Muni | Invesco National vs. SPDR Nuveen Bloomberg |
| First Trust vs. Fundamental Income Net | First Trust vs. TTM Technologies | First Trust vs. DXP Enterprises | First Trust vs. Citi Trends |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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