Correlation Between Invesco Municipal and Invesco European
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco European 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 European 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 European Small, you can compare the effects of market volatilities on Invesco Municipal and Invesco European 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 European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco European.
Diversification Opportunities for Invesco Municipal and Invesco European
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Invesco and Invesco is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Invesco European Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco European Small 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 European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco European Small has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco European go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco European
Assuming the 90 days horizon Invesco Municipal is expected to generate 1.33 times less return on investment than Invesco European. But when comparing it to its historical volatility, Invesco Municipal Income is 3.06 times less risky than Invesco European. It trades about 0.05 of its potential returns per unit of risk. Invesco European Small is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,400 in Invesco European Small on August 26, 2024 and sell it today you would earn a total of 119.00 from holding Invesco European Small or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Income vs. Invesco European Small
Performance |
| Timeline |
| Invesco Municipal Income |
| Invesco European Small |
Invesco Municipal and Invesco European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco European
The main advantage of trading using opposite Invesco Municipal and Invesco European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco European 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 European will offset losses from the drop in Invesco European's long position.| Invesco Municipal vs. Falcon Focus Scv | Invesco Municipal vs. Western Asset Municipal | Invesco Municipal vs. Red Oak Technology | Invesco Municipal vs. Rbb Fund |
| Invesco European vs. Invesco Municipal Income | Invesco European vs. Invesco Municipal Income | Invesco European vs. Invesco Municipal Income | Invesco European vs. Oppenheimer Rising Dividends |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |