Correlation Between Invesco Municipal and Invesco Trust
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Trust 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 Trust 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 Trust For, you can compare the effects of market volatilities on Invesco Municipal and Invesco Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Trust.
Diversification Opportunities for Invesco Municipal and Invesco Trust
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and Invesco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Trust and Invesco Trust For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Trust For 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Trust For has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Trust go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Trust
Considering the 90-day investment horizon Invesco Municipal Trust is expected to under-perform the Invesco Trust. But the stock apears to be less risky and, when comparing its historical volatility, Invesco Municipal Trust is 1.04 times less risky than Invesco Trust. The stock trades about -0.11 of its potential returns per unit of risk. The Invesco Trust For is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,030 in Invesco Trust For on August 23, 2024 and sell it today you would lose (14.00) from holding Invesco Trust For or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Trust vs. Invesco Trust For
Performance |
| Timeline |
| Invesco Municipal Trust |
| Invesco Trust For |
Invesco Municipal and Invesco Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco Trust
The main advantage of trading using opposite Invesco Municipal and Invesco Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Trust 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 Trust will offset losses from the drop in Invesco Trust's long position.| Invesco Municipal vs. Pioneer Floating Rate | Invesco Municipal vs. The Gabelli Equity | Invesco Municipal vs. Pioneer Municipal High | Invesco Municipal vs. Nuveen Global High |
| Invesco Trust vs. Pioneer Floating Rate | Invesco Trust vs. The Gabelli Equity | Invesco Trust vs. Pioneer Municipal High | Invesco Trust vs. Nuveen Global High |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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