Correlation Between Invesco Municipal and Invesco International
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco International 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 International 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 International E, you can compare the effects of market volatilities on Invesco Municipal and Invesco International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco International.
Diversification Opportunities for Invesco Municipal and Invesco International
-0.33 | Correlation Coefficient |
Very good 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 International E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco International has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco International go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco International
Assuming the 90 days horizon Invesco Municipal is expected to generate 5.5 times less return on investment than Invesco International. But when comparing it to its historical volatility, Invesco Municipal Income is 2.95 times less risky than Invesco International. It trades about 0.07 of its potential returns per unit of risk. Invesco International E is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,052 in Invesco International E on August 24, 2024 and sell it today you would earn a total of 108.00 from holding Invesco International E or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 19.6% |
| Values | Daily Returns |
Invesco Municipal Income vs. Invesco International E
Performance |
| Timeline |
| Invesco Municipal Income |
| Invesco International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Invesco Municipal and Invesco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco International
The main advantage of trading using opposite Invesco Municipal and Invesco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco International 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 International will offset losses from the drop in Invesco International's long position.The idea behind Invesco Municipal Income and Invesco International E 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.
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |