Correlation Between Invesco Municipal and Invesco Global
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Global 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 Global 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 Global E, you can compare the effects of market volatilities on Invesco Municipal and Invesco Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Global.
Diversification Opportunities for Invesco Municipal and Invesco Global
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Invesco is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Invesco Global E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global E 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global E has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Global go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Global
Assuming the 90 days horizon Invesco Municipal Income is expected to generate 0.17 times more return on investment than Invesco Global. However, Invesco Municipal Income is 6.02 times less risky than Invesco Global. It trades about -0.3 of its potential returns per unit of risk. Invesco Global E is currently generating about -0.21 per unit of risk. If you would invest 1,212 in Invesco Municipal Income on September 27, 2024 and sell it today you would lose (20.00) from holding Invesco Municipal Income or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Income vs. Invesco Global E
Performance |
| Timeline |
| Invesco Municipal Income |
| Invesco Global E |
Invesco Municipal and Invesco Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco Global
The main advantage of trading using opposite Invesco Municipal and Invesco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Global 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 Global will offset losses from the drop in Invesco Global's long position.| Invesco Municipal vs. Invesco Municipal Income | Invesco Municipal vs. Oppenheimer Rising Dividends | Invesco Municipal vs. Invesco High Yield | Invesco Municipal vs. Oppenheimer Strategic Income |
| Invesco Global vs. Invesco Municipal Income | Invesco Global vs. Invesco Municipal Income | Invesco Global vs. Invesco Municipal Income | Invesco Global vs. Oppenheimer Rising Dividends |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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