Correlation Between Invesco Municipal and Invesco Steelpath
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Steelpath 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 Steelpath 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 Steelpath Mlp, you can compare the effects of market volatilities on Invesco Municipal and Invesco Steelpath 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 Steelpath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Steelpath.
Diversification Opportunities for Invesco Municipal and Invesco Steelpath
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Invesco and Invesco is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Invesco Steelpath Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Steelpath Mlp 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 Steelpath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Steelpath Mlp has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Steelpath go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Steelpath
Assuming the 90 days horizon Invesco Municipal is expected to generate 9.16 times less return on investment than Invesco Steelpath. But when comparing it to its historical volatility, Invesco Municipal Income is 3.84 times less risky than Invesco Steelpath. It trades about 0.06 of its potential returns per unit of risk. Invesco Steelpath Mlp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 308.00 in Invesco Steelpath Mlp on August 30, 2024 and sell it today you would earn a total of 321.00 from holding Invesco Steelpath Mlp or generate 104.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Income vs. Invesco Steelpath Mlp
Performance |
| Timeline |
| Invesco Municipal Income |
| Invesco Steelpath Mlp |
Invesco Municipal and Invesco Steelpath Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco Steelpath
The main advantage of trading using opposite Invesco Municipal and Invesco Steelpath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Steelpath 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 Steelpath will offset losses from the drop in Invesco Steelpath's long position.The idea behind Invesco Municipal Income and Invesco Steelpath Mlp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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