Correlation Between Invesco Municipal and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Diamond Hill 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 Municipal and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Municipal Trust and Diamond Hill Investment, you can compare the effects of market volatilities on Invesco Municipal and Diamond Hill 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 Municipal with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Diamond Hill.
Diversification Opportunities for Invesco Municipal and Diamond Hill
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and Diamond is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Trust and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment and Invesco Municipal 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 Municipal Trust are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Diamond Hill go up and down completely randomly.
Pair Corralation between Invesco Municipal and Diamond Hill
Considering the 90-day investment horizon Invesco Municipal Trust is expected to generate 0.44 times more return on investment than Diamond Hill. However, Invesco Municipal Trust is 2.28 times less risky than Diamond Hill. It trades about 0.06 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about -0.15 per unit of risk. If you would invest 980.00 in Invesco Municipal Trust on November 5, 2024 and sell it today you would earn a total of 6.00 from holding Invesco Municipal Trust or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Trust vs. Diamond Hill Investment
Performance |
| Timeline |
| Invesco Municipal Trust |
| Diamond Hill Investment |
Invesco Municipal and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Diamond Hill
The main advantage of trading using opposite Invesco Municipal and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Invesco Municipal vs. Invesco Trust For | Invesco Municipal vs. Invesco Quality Municipal | Invesco Municipal vs. Invesco Municipal Opportunity | Invesco Municipal vs. MFS High Income |
| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Stocks Directory Find actively traded stocks across global markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |