Correlation Between Invesco Trust and DWS Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco Trust and DWS Municipal 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 Trust and DWS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Trust For and DWS Municipal Income, you can compare the effects of market volatilities on Invesco Trust and DWS Municipal 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 Trust with a short position of DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Trust and DWS Municipal.
Diversification Opportunities for Invesco Trust and DWS Municipal
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and DWS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Trust For and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income and Invesco Trust 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 Trust For are associated (or correlated) with DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of Invesco Trust i.e., Invesco Trust and DWS Municipal go up and down completely randomly.
Pair Corralation between Invesco Trust and DWS Municipal
Considering the 90-day investment horizon Invesco Trust is expected to generate 1.04 times less return on investment than DWS Municipal. But when comparing it to its historical volatility, Invesco Trust For is 1.25 times less risky than DWS Municipal. It trades about 0.26 of its potential returns per unit of risk. DWS Municipal Income is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 965.00 in DWS Municipal Income on August 28, 2024 and sell it today you would earn a total of 27.00 from holding DWS Municipal Income or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Trust For vs. DWS Municipal Income
Performance |
| Timeline |
| Invesco Trust For |
| DWS Municipal Income |
Invesco Trust and DWS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Trust and DWS Municipal
The main advantage of trading using opposite Invesco Trust and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Trust position performs unexpectedly, DWS Municipal 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.| Invesco Trust vs. Pimco New York | Invesco Trust vs. Pimco New York | Invesco Trust vs. BlackRock New York | Invesco Trust vs. Invesco California Value |
| DWS Municipal vs. DTF Tax Free | DWS Municipal vs. Blackrock Muniyield Quality | DWS Municipal vs. Blackrock Muni Intermediate | DWS Municipal vs. Blackrock Muniholdings Quality |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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