Correlation Between Invesco Municipal and Invesco Asia
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Asia 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 Asia 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 Asia Pacific, you can compare the effects of market volatilities on Invesco Municipal and Invesco Asia 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 Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Asia.
Diversification Opportunities for Invesco Municipal and Invesco Asia
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and INVESCO is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Invesco Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Asia Pacific 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 Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Asia Pacific has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Asia go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Asia
Assuming the 90 days horizon Invesco Municipal Income is expected to generate 0.31 times more return on investment than Invesco Asia. However, Invesco Municipal Income is 3.19 times less risky than Invesco Asia. It trades about 0.19 of its potential returns per unit of risk. Invesco Asia Pacific is currently generating about -0.09 per unit of risk. If you would invest 1,190 in Invesco Municipal Income on December 1, 2024 and sell it today you would earn a total of 12.00 from holding Invesco Municipal Income or generate 1.01% 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 Asia Pacific
Performance |
| Timeline |
| Invesco Municipal Income |
| Invesco Asia Pacific |
Invesco Municipal and Invesco Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco Asia
The main advantage of trading using opposite Invesco Municipal and Invesco Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Asia 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 Asia will offset losses from the drop in Invesco Asia's long position.| Invesco Municipal vs. Transamerica International Small | Invesco Municipal vs. United Kingdom Small | Invesco Municipal vs. Goldman Sachs Small | Invesco Municipal vs. Small Midcap Dividend Income |
| Invesco Asia vs. Alpine High Yield | Invesco Asia vs. Aqr Alternative Risk | Invesco Asia vs. Pace High Yield | Invesco Asia vs. Goldman Sachs High |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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