Correlation Between Invesco Municipal and Invesco Emerging
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Invesco Municipal and Invesco Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Emerging.
Diversification Opportunities for Invesco Municipal and Invesco Emerging
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Invesco is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Invesco Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Emerging Markets has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Emerging go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Emerging
Assuming the 90 days horizon Invesco Municipal is expected to generate 1.6 times less return on investment than Invesco Emerging. But when comparing it to its historical volatility, Invesco Municipal Income is 1.75 times less risky than Invesco Emerging. It trades about 0.05 of its potential returns per unit of risk. Invesco Emerging Markets is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 462.00 in Invesco Emerging Markets on August 24, 2024 and sell it today you would earn a total of 57.00 from holding Invesco Emerging Markets or generate 12.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Income vs. Invesco Emerging Markets
Performance |
| Timeline |
| Invesco Municipal Income |
| Invesco Emerging Markets |
Invesco Municipal and Invesco Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco Emerging
The main advantage of trading using opposite Invesco Municipal and Invesco Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Emerging 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 Emerging will offset losses from the drop in Invesco Emerging's long position.| Invesco Municipal vs. Siit High Yield | Invesco Municipal vs. Pia High Yield | Invesco Municipal vs. Virtus High Yield | Invesco Municipal vs. Msift High Yield |
| Invesco Emerging vs. Cutler Equity | Invesco Emerging vs. Gmo Global Equity | Invesco Emerging vs. Touchstone International Equity | Invesco Emerging vs. Ultra Short Fixed Income |
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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