Correlation Between Southern Michigan and Invesco High
Can any of the company-specific risk be diversified away by investing in both Southern Michigan and Invesco High 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 Southern Michigan and Invesco High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Michigan Bancorp and Invesco High Income, you can compare the effects of market volatilities on Southern Michigan and Invesco High 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 Southern Michigan with a short position of Invesco High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Michigan and Invesco High.
Diversification Opportunities for Southern Michigan and Invesco High
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southern and Invesco is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Southern Michigan Bancorp and Invesco High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco High Income and Southern Michigan 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 Southern Michigan Bancorp are associated (or correlated) with Invesco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco High Income has no effect on the direction of Southern Michigan i.e., Southern Michigan and Invesco High go up and down completely randomly.
Pair Corralation between Southern Michigan and Invesco High
Given the investment horizon of 90 days Southern Michigan Bancorp is expected to generate 4.95 times more return on investment than Invesco High. However, Southern Michigan is 4.95 times more volatile than Invesco High Income. It trades about 0.01 of its potential returns per unit of risk. Invesco High Income is currently generating about 0.01 per unit of risk. If you would invest 2,003 in Southern Michigan Bancorp on August 30, 2024 and sell it today you would lose (128.00) from holding Southern Michigan Bancorp or give up 6.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.69% |
| Values | Daily Returns |
Southern Michigan Bancorp vs. Invesco High Income
Performance |
| Timeline |
| Southern Michigan Bancorp |
| Invesco High Income |
Southern Michigan and Invesco High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Michigan and Invesco High
The main advantage of trading using opposite Southern Michigan and Invesco High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Michigan position performs unexpectedly, Invesco High 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 High will offset losses from the drop in Invesco High's long position.| Southern Michigan vs. Invesco High Income | Southern Michigan vs. Blackrock Muniholdings Ny | Southern Michigan vs. Nuveen California Select | Southern Michigan vs. MFS Investment Grade |
| Invesco High vs. MFS Investment Grade | Invesco High vs. Eaton Vance National | Invesco High vs. Nuveen California Select | Invesco High vs. Federated Premier Municipal |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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