Correlation Between Invesco Municipal and Invesco Main
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Main 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 Main 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 Main Street, you can compare the effects of market volatilities on Invesco Municipal and Invesco Main 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 Main. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Main.
Diversification Opportunities for Invesco Municipal and Invesco Main
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Invesco is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Invesco Main Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Main Street 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 Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Main Street has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Main go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Main
Assuming the 90 days horizon Invesco Municipal Income is expected to under-perform the Invesco Main. But the mutual fund apears to be less risky and, when comparing its historical volatility, Invesco Municipal Income is 3.46 times less risky than Invesco Main. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Invesco Main Street is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2,211 in Invesco Main Street on November 2, 2024 and sell it today you would earn a total of 123.00 from holding Invesco Main Street or generate 5.56% 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 Main Street
Performance |
| Timeline |
| Invesco Municipal Income |
| Invesco Main Street |
Invesco Municipal and Invesco Main Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco Main
The main advantage of trading using opposite Invesco Municipal and Invesco Main positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Main 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 Main will offset losses from the drop in Invesco Main's long position.The idea behind Invesco Municipal Income and Invesco Main Street 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.
| Invesco Main vs. Invesco Municipal Income | Invesco Main vs. Invesco Municipal Income | Invesco Main vs. Invesco Municipal Income | Invesco Main 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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