Correlation Between Invesco National and Xtrackers Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco National and Xtrackers 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 National and Xtrackers Municipal 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 Xtrackers Municipal Infrastructure, you can compare the effects of market volatilities on Invesco National and Xtrackers 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 National with a short position of Xtrackers Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco National and Xtrackers Municipal.
Diversification Opportunities for Invesco National and Xtrackers Municipal
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Xtrackers is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Invesco National AMT Free and Xtrackers Municipal Infrastruc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Municipal 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 Xtrackers Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Municipal has no effect on the direction of Invesco National i.e., Invesco National and Xtrackers Municipal go up and down completely randomly.
Pair Corralation between Invesco National and Xtrackers Municipal
Considering the 90-day investment horizon Invesco National is expected to generate 1.18 times less return on investment than Xtrackers Municipal. But when comparing it to its historical volatility, Invesco National AMT Free is 1.21 times less risky than Xtrackers Municipal. It trades about 0.05 of its potential returns per unit of risk. Xtrackers Municipal Infrastructure is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,285 in Xtrackers Municipal Infrastructure on November 19, 2024 and sell it today you would earn a total of 227.00 from holding Xtrackers Municipal Infrastructure or generate 9.93% return on investment 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. Xtrackers Municipal Infrastruc
Performance |
| Timeline |
| Invesco National AMT |
| Xtrackers Municipal |
Invesco National and Xtrackers Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco National and Xtrackers Municipal
The main advantage of trading using opposite Invesco National and Xtrackers Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco National position performs unexpectedly, Xtrackers 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 Xtrackers Municipal will offset losses from the drop in Xtrackers Municipal'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 |
| Xtrackers Municipal vs. VanEck Long Muni | Xtrackers Municipal vs. VanEck Short High | Xtrackers Municipal vs. VanEck CEF Municipal | Xtrackers Municipal vs. PIMCO Short Term |
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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