Correlation Between Invesco California and MFS Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco California and MFS 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 California and MFS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco California Value and MFS Municipal Income, you can compare the effects of market volatilities on Invesco California and MFS 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 California with a short position of MFS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco California and MFS Municipal.
Diversification Opportunities for Invesco California and MFS Municipal
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and MFS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Invesco California Value and MFS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Municipal Income and Invesco California 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 California Value are associated (or correlated) with MFS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Municipal Income has no effect on the direction of Invesco California i.e., Invesco California and MFS Municipal go up and down completely randomly.
Pair Corralation between Invesco California and MFS Municipal
Considering the 90-day investment horizon Invesco California Value is expected to generate 1.19 times more return on investment than MFS Municipal. However, Invesco California is 1.19 times more volatile than MFS Municipal Income. It trades about 0.13 of its potential returns per unit of risk. MFS Municipal Income is currently generating about 0.11 per unit of risk. If you would invest 1,018 in Invesco California Value on August 28, 2024 and sell it today you would earn a total of 21.00 from holding Invesco California Value or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco California Value vs. MFS Municipal Income
Performance |
| Timeline |
| Invesco California Value |
| MFS Municipal Income |
Invesco California and MFS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco California and MFS Municipal
The main advantage of trading using opposite Invesco California and MFS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco California position performs unexpectedly, MFS 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 MFS Municipal will offset losses from the drop in MFS Municipal's long position.| Invesco California vs. Pimco California Municipal | Invesco California vs. Invesco Pennsylvania Value | Invesco California vs. Nuveen California Dividend | Invesco California vs. Invesco Advantage MIT |
| MFS Municipal vs. PowerUp Acquisition Corp | MFS Municipal vs. Aurora Innovation | MFS Municipal vs. HUMANA INC | MFS Municipal vs. Aquagold International |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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