Correlation Between Invesco Advantage and DWS Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco Advantage and DWS 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 Advantage and DWS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Advantage MIT and DWS Municipal Income, you can compare the effects of market volatilities on Invesco Advantage and DWS 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 Advantage with a short position of DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Advantage and DWS Municipal.
Diversification Opportunities for Invesco Advantage and DWS Municipal
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and DWS is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Advantage MIT and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income and Invesco Advantage 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 Advantage MIT are associated (or correlated) with DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of Invesco Advantage i.e., Invesco Advantage and DWS Municipal go up and down completely randomly.
Pair Corralation between Invesco Advantage and DWS Municipal
Considering the 90-day investment horizon Invesco Advantage MIT is expected to generate 1.32 times more return on investment than DWS Municipal. However, Invesco Advantage is 1.32 times more volatile than DWS Municipal Income. It trades about 0.36 of its potential returns per unit of risk. DWS Municipal Income is currently generating about 0.31 per unit of risk. If you would invest 872.00 in Invesco Advantage MIT on November 18, 2024 and sell it today you would earn a total of 27.00 from holding Invesco Advantage MIT or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Advantage MIT vs. DWS Municipal Income
Performance |
| Timeline |
| Invesco Advantage MIT |
| DWS Municipal Income |
Invesco Advantage and DWS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Advantage and DWS Municipal
The main advantage of trading using opposite Invesco Advantage and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Advantage position performs unexpectedly, DWS 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.| Invesco Advantage vs. Invesco Quality Municipal | Invesco Advantage vs. Invesco California Value | Invesco Advantage vs. DWS Municipal Income | Invesco Advantage vs. Invesco Trust For |
| DWS Municipal vs. DTF Tax Free | DWS Municipal vs. Blackrock Muniyield Quality | DWS Municipal vs. Blackrock Muni Intermediate | DWS Municipal vs. Blackrock Muniholdings Quality |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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