Correlation Between Invesco Municipal and Adams Natural
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Adams Natural 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 Adams Natural 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 Adams Natural Resources, you can compare the effects of market volatilities on Invesco Municipal and Adams Natural 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 Adams Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Adams Natural.
Diversification Opportunities for Invesco Municipal and Adams Natural
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Invesco and Adams is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Trust and Adams Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Natural Resources 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 Adams Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Natural Resources has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Adams Natural go up and down completely randomly.
Pair Corralation between Invesco Municipal and Adams Natural
Considering the 90-day investment horizon Invesco Municipal Trust is expected to generate 0.78 times more return on investment than Adams Natural. However, Invesco Municipal Trust is 1.28 times less risky than Adams Natural. It trades about 0.09 of its potential returns per unit of risk. Adams Natural Resources is currently generating about -0.19 per unit of risk. If you would invest 1,002 in Invesco Municipal Trust on September 12, 2024 and sell it today you would earn a total of 14.00 from holding Invesco Municipal Trust or generate 1.4% 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. Adams Natural Resources
Performance |
| Timeline |
| Invesco Municipal Trust |
| Adams Natural Resources |
Invesco Municipal and Adams Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Adams Natural
The main advantage of trading using opposite Invesco Municipal and Adams Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Adams Natural 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 Adams Natural will offset losses from the drop in Adams Natural'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 |
| Adams Natural vs. Oxford Lane Capital | Adams Natural vs. Orchid Island Capital | Adams Natural vs. Guggenheim Strategic Opportunities | Adams Natural vs. Stone Harbor Emerging |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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