Correlation Between Invesco Municipal and Invesco Growth
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Growth 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 Growth 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 Growth Allocation, you can compare the effects of market volatilities on Invesco Municipal and Invesco Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Growth.
Diversification Opportunities for Invesco Municipal and Invesco Growth
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Invesco and Invesco is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Invesco Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Growth Allocation 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Growth Allocation has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Growth go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Growth
Assuming the 90 days horizon Invesco Municipal is expected to generate 3.08 times less return on investment than Invesco Growth. But when comparing it to its historical volatility, Invesco Municipal Income is 1.67 times less risky than Invesco Growth. It trades about 0.19 of its potential returns per unit of risk. Invesco Growth Allocation is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,556 in Invesco Growth Allocation on September 1, 2024 and sell it today you would earn a total of 68.00 from holding Invesco Growth Allocation or generate 4.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Invesco Municipal Income vs. Invesco Growth Allocation
Performance |
| Timeline |
| Invesco Municipal Income |
| Invesco Growth Allocation |
Invesco Municipal and Invesco Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco Growth
The main advantage of trading using opposite Invesco Municipal and Invesco Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Growth 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 Growth will offset losses from the drop in Invesco Growth's long position.| Invesco Municipal vs. Harbor Diversified International | Invesco Municipal vs. Fidelity Advisor Diversified | Invesco Municipal vs. Small Cap Stock | Invesco Municipal vs. Adams Diversified Equity |
| Invesco Growth vs. Calvert Moderate Allocation | Invesco Growth vs. Lifestyle Ii Moderate | Invesco Growth vs. Wisdomtree Siegel Moderate | Invesco Growth vs. Saat Moderate Strategy |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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