Correlation Between Saat Defensive and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Saat Defensive and Invesco 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 Saat Defensive and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saat Defensive Strategy and Invesco Municipal Income, you can compare the effects of market volatilities on Saat Defensive and Invesco 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 Saat Defensive with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saat Defensive and Invesco Municipal.
Diversification Opportunities for Saat Defensive and Invesco Municipal
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Saat and Invesco is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Saat Defensive Strategy and Invesco Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Income and Saat Defensive 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 Saat Defensive Strategy are associated (or correlated) with Invesco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Municipal Income has no effect on the direction of Saat Defensive i.e., Saat Defensive and Invesco Municipal go up and down completely randomly.
Pair Corralation between Saat Defensive and Invesco Municipal
Assuming the 90 days horizon Saat Defensive Strategy is expected to generate 0.32 times more return on investment than Invesco Municipal. However, Saat Defensive Strategy is 3.13 times less risky than Invesco Municipal. It trades about 0.14 of its potential returns per unit of risk. Invesco Municipal Income is currently generating about -0.01 per unit of risk. If you would invest 853.00 in Saat Defensive Strategy on November 2, 2024 and sell it today you would earn a total of 85.00 from holding Saat Defensive Strategy or generate 9.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Saat Defensive Strategy vs. Invesco Municipal Income
Performance |
| Timeline |
| Saat Defensive Strategy |
| Invesco Municipal Income |
Saat Defensive and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saat Defensive and Invesco Municipal
The main advantage of trading using opposite Saat Defensive and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saat Defensive position performs unexpectedly, Invesco 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 Invesco Municipal will offset losses from the drop in Invesco Municipal's long position.| Saat Defensive vs. Saat Tax Managed Aggressive | Saat Defensive vs. Saat Market Growth | Saat Defensive vs. Saat Aggressive Strategy | Saat Defensive vs. Saat Aggressive Strategy |
| Invesco Municipal vs. Glg Intl Small | Invesco Municipal vs. Small Pany Growth | Invesco Municipal vs. Commonwealth Global Fund | Invesco Municipal vs. Qs Large Cap |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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