Correlation Between Invesco Municipal and Invesco Corporate
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Corporate 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 Corporate 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 Porate Bond, you can compare the effects of market volatilities on Invesco Municipal and Invesco Corporate 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 Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Corporate.
Diversification Opportunities for Invesco Municipal and Invesco Corporate
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 Porate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Porate Bond 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 Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Porate Bond has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Corporate go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Corporate
Assuming the 90 days horizon Invesco Municipal Income is expected to generate 0.89 times more return on investment than Invesco Corporate. However, Invesco Municipal Income is 1.12 times less risky than Invesco Corporate. It trades about 0.2 of its potential returns per unit of risk. Invesco Porate Bond is currently generating about 0.1 per unit of risk. If you would invest 1,196 in Invesco Municipal Income on August 30, 2024 and sell it today you would earn a total of 18.00 from holding Invesco Municipal Income or generate 1.51% 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 Porate Bond
Performance |
| Timeline |
| Invesco Municipal Income |
| Invesco Porate Bond |
Invesco Municipal and Invesco Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco Corporate
The main advantage of trading using opposite Invesco Municipal and Invesco Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Corporate 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 Corporate will offset losses from the drop in Invesco Corporate's long position.| Invesco Municipal vs. Health Care Fund | Invesco Municipal vs. Prudential Health Sciences | Invesco Municipal vs. Baron Health Care | Invesco Municipal vs. Deutsche Health And |
| Invesco Corporate vs. Dws Government Money | Invesco Corporate vs. Angel Oak Financial | Invesco Corporate vs. Ambrus Core Bond | Invesco Corporate vs. Rbc Bluebay Global |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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