Correlation Between Invesco Municipal and New Mountain
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and New Mountain 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 New Mountain 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 New Mountain Finance, you can compare the effects of market volatilities on Invesco Municipal and New Mountain 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 New Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and New Mountain.
Diversification Opportunities for Invesco Municipal and New Mountain
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and New is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Trust and New Mountain Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Mountain Finance 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 New Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Mountain Finance has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and New Mountain go up and down completely randomly.
Pair Corralation between Invesco Municipal and New Mountain
Considering the 90-day investment horizon Invesco Municipal is expected to generate 2.44 times less return on investment than New Mountain. In addition to that, Invesco Municipal is 1.04 times more volatile than New Mountain Finance. It trades about 0.21 of its total potential returns per unit of risk. New Mountain Finance is currently generating about 0.52 per unit of volatility. If you would invest 1,127 in New Mountain Finance on November 18, 2024 and sell it today you would earn a total of 66.00 from holding New Mountain Finance or generate 5.86% 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. New Mountain Finance
Performance |
| Timeline |
| Invesco Municipal Trust |
| New Mountain Finance |
Invesco Municipal and New Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and New Mountain
The main advantage of trading using opposite Invesco Municipal and New Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, New Mountain 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 New Mountain will offset losses from the drop in New Mountain'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 |
| New Mountain vs. BlackRock TCP Capital | New Mountain vs. Carlyle Secured Lending | New Mountain vs. Sixth Street Specialty | New Mountain vs. WhiteHorse Finance |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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