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 Growth, 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
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Invesco and Invesco is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Invesco International Growth 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 1.5 times less return on investment than Invesco International. But when comparing it to its historical volatility, Invesco Municipal Income is 3.61 times less risky than Invesco International. It trades about 0.07 of its potential returns per unit of risk. Invesco International Growth is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,257 in Invesco International Growth on September 14, 2024 and sell it today you would earn a total of 120.00 from holding Invesco International Growth or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Income vs. Invesco International Growth
Performance |
| Timeline |
| Invesco Municipal Income |
| Invesco International |
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.| Invesco Municipal vs. Aam Select Income | Invesco Municipal vs. Volumetric Fund Volumetric | Invesco Municipal vs. Fa 529 Aggressive | Invesco Municipal vs. T Rowe Price |
| Invesco International vs. Alliancebernstein Global High | Invesco International vs. Ab Global Bond | Invesco International vs. Qs Global Equity | Invesco International vs. Artisan Global Unconstrained |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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