Correlation Between Invesco National and IShares Short
Can any of the company-specific risk be diversified away by investing in both Invesco National and IShares Short 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 IShares Short 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 iShares Short Term National, you can compare the effects of market volatilities on Invesco National and IShares Short 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 IShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco National and IShares Short.
Diversification Opportunities for Invesco National and IShares Short
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Invesco National AMT Free and iShares Short Term National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Short Term 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 IShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Short Term has no effect on the direction of Invesco National i.e., Invesco National and IShares Short go up and down completely randomly.
Pair Corralation between Invesco National and IShares Short
Considering the 90-day investment horizon Invesco National AMT Free is expected to generate 4.35 times more return on investment than IShares Short. However, Invesco National is 4.35 times more volatile than iShares Short Term National. It trades about 0.08 of its potential returns per unit of risk. iShares Short Term National is currently generating about 0.13 per unit of risk. If you would invest 2,367 in Invesco National AMT Free on August 27, 2024 and sell it today you would earn a total of 20.00 from holding Invesco National AMT Free or generate 0.84% 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. iShares Short Term National
Performance |
| Timeline |
| Invesco National AMT |
| iShares Short Term |
Invesco National and IShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco National and IShares Short
The main advantage of trading using opposite Invesco National and IShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco National position performs unexpectedly, IShares Short 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 IShares Short will offset losses from the drop in IShares Short's long position.| Invesco National vs. Franklin Liberty Intermediate | Invesco National vs. Hartford Municipal Opportunities | Invesco National vs. IQ MacKay Municipal |
| IShares Short vs. iShares New York | IShares Short vs. SPDR Nuveen Bloomberg | IShares Short vs. iShares California Muni | IShares Short vs. iShares National Muni |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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