Correlation Between Invesco Municipal and Invesco Plc
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Plc 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 Invesco Plc 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 Invesco Plc, you can compare the effects of market volatilities on Invesco Municipal and Invesco Plc 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 Invesco Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Plc.
Diversification Opportunities for Invesco Municipal and Invesco Plc
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Invesco and Invesco is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Trust and Invesco Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Plc 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 Invesco Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Plc has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Plc go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Plc
Considering the 90-day investment horizon Invesco Municipal is expected to generate 5.63 times less return on investment than Invesco Plc. But when comparing it to its historical volatility, Invesco Municipal Trust is 3.01 times less risky than Invesco Plc. It trades about 0.04 of its potential returns per unit of risk. Invesco Plc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,769 in Invesco Plc on August 28, 2024 and sell it today you would earn a total of 46.00 from holding Invesco Plc or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Invesco Municipal Trust vs. Invesco Plc
Performance |
| Timeline |
| Invesco Municipal Trust |
| Invesco Plc |
Invesco Municipal and Invesco Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco Plc
The main advantage of trading using opposite Invesco Municipal and Invesco Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Plc 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 Plc will offset losses from the drop in Invesco Plc'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 |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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