Correlation Between Invesco Municipal and Invesco Us
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Us 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 Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Municipal Income and Invesco Government Fund, you can compare the effects of market volatilities on Invesco Municipal and Invesco Us 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 Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Us.
Diversification Opportunities for Invesco Municipal and Invesco Us
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and Invesco is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Invesco Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Government 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 Income are associated (or correlated) with Invesco Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Government has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Us go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Us
Assuming the 90 days horizon Invesco Municipal is expected to generate 1.43 times less return on investment than Invesco Us. In addition to that, Invesco Municipal is 1.1 times more volatile than Invesco Government Fund. It trades about 0.06 of its total potential returns per unit of risk. Invesco Government Fund is currently generating about 0.09 per unit of volatility. If you would invest 621.00 in Invesco Government Fund on August 30, 2024 and sell it today you would earn a total of 75.00 from holding Invesco Government Fund or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Income vs. Invesco Government Fund
Performance |
| Timeline |
| Invesco Municipal Income |
| Invesco Government |
Invesco Municipal and Invesco Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco Us
The main advantage of trading using opposite Invesco Municipal and Invesco Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Us 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 Us will offset losses from the drop in Invesco Us' long position.The idea behind Invesco Municipal Income and Invesco Government Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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