Correlation Between Invesco Municipal and Invesco Exchange
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Exchange 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 Exchange 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 Exchange, you can compare the effects of market volatilities on Invesco Municipal and Invesco Exchange 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 Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Exchange.
Diversification Opportunities for Invesco Municipal and Invesco Exchange
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 Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Exchange 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 Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Exchange has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Exchange go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Exchange
Assuming the 90 days horizon Invesco Municipal Income is expected to generate 2.39 times more return on investment than Invesco Exchange. However, Invesco Municipal is 2.39 times more volatile than Invesco Exchange. It trades about 0.21 of its potential returns per unit of risk. Invesco Exchange is currently generating about -0.49 per unit of risk. If you would invest 1,194 in Invesco Municipal Income on August 30, 2024 and sell it today you would earn a total of 19.00 from holding Invesco Municipal Income or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Invesco Municipal Income vs. Invesco Exchange
Performance |
| Timeline |
| Invesco Municipal Income |
| Invesco Exchange |
Invesco Municipal and Invesco Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco Exchange
The main advantage of trading using opposite Invesco Municipal and Invesco Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Exchange 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 Exchange will offset losses from the drop in Invesco Exchange's long position.| Invesco Municipal vs. Pace Large Value | Invesco Municipal vs. Aqr Large Cap | Invesco Municipal vs. Pace Large Value | Invesco Municipal vs. Vanguard Equity Income |
| Invesco Exchange vs. Invesco Municipal Income | Invesco Exchange vs. Invesco Municipal Income | Invesco Exchange vs. Invesco Municipal Income | Invesco Exchange 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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