Correlation Between Invesco Municipal and Invesco Quality
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Quality 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 Quality 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 Quality Income, you can compare the effects of market volatilities on Invesco Municipal and Invesco Quality 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 Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Quality.
Diversification Opportunities for Invesco Municipal and Invesco Quality
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and Invesco is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Invesco Quality Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Quality Income 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 Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Quality Income has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Quality go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Quality
Assuming the 90 days horizon Invesco Municipal Income is expected to generate 0.68 times more return on investment than Invesco Quality. However, Invesco Municipal Income is 1.47 times less risky than Invesco Quality. It trades about 0.09 of its potential returns per unit of risk. Invesco Quality Income is currently generating about 0.05 per unit of risk. If you would invest 1,116 in Invesco Municipal Income on August 29, 2024 and sell it today you would earn a total of 98.00 from holding Invesco Municipal Income or generate 8.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Income vs. Invesco Quality Income
Performance |
| Timeline |
| Invesco Municipal Income |
| Invesco Quality Income |
Invesco Municipal and Invesco Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Invesco Quality
The main advantage of trading using opposite Invesco Municipal and Invesco Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Quality 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 Quality will offset losses from the drop in Invesco Quality'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 Quality vs. Angel Oak Ultrashort | Invesco Quality vs. Artisan Emerging Markets | Invesco Quality vs. Nebraska Municipal Fund | Invesco Quality vs. Kinetics Market Opportunities |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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