Correlation Between Invesco Municipal and MFS Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal 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 Municipal 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 Municipal Trust and MFS Municipal Income, you can compare the effects of market volatilities on Invesco Municipal 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 Municipal with a short position of MFS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and MFS Municipal.
Diversification Opportunities for Invesco Municipal and MFS Municipal
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and MFS is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Trust 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 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 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 Municipal i.e., Invesco Municipal and MFS Municipal go up and down completely randomly.
Pair Corralation between Invesco Municipal and MFS Municipal
Considering the 90-day investment horizon Invesco Municipal is expected to generate 2.75 times less return on investment than MFS Municipal. In addition to that, Invesco Municipal is 1.0 times more volatile than MFS Municipal Income. It trades about 0.04 of its total potential returns per unit of risk. MFS Municipal Income is currently generating about 0.11 per unit of volatility. If you would invest 548.00 in MFS Municipal Income on August 28, 2024 and sell it today you would earn a total of 8.00 from holding MFS Municipal Income or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Trust vs. MFS Municipal Income
Performance |
| Timeline |
| Invesco Municipal Trust |
| MFS Municipal Income |
Invesco Municipal and MFS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and MFS Municipal
The main advantage of trading using opposite Invesco Municipal and MFS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal 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 Municipal vs. Invesco Trust For | Invesco Municipal vs. Invesco Quality Municipal | Invesco Municipal vs. Invesco Municipal Opportunity | Invesco Municipal vs. MFS High Income |
| 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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