Correlation Between VivoPower International and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both VivoPower International and Invesco 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 VivoPower International and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VivoPower International PLC and Invesco Municipal Income, you can compare the effects of market volatilities on VivoPower International and Invesco 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 VivoPower International with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of VivoPower International and Invesco Municipal.
Diversification Opportunities for VivoPower International and Invesco Municipal
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between VivoPower and Invesco is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC and Invesco Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Income and VivoPower International 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 VivoPower International PLC are associated (or correlated) with Invesco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Municipal Income has no effect on the direction of VivoPower International i.e., VivoPower International and Invesco Municipal go up and down completely randomly.
Pair Corralation between VivoPower International and Invesco Municipal
Given the investment horizon of 90 days VivoPower International PLC is expected to generate 56.25 times more return on investment than Invesco Municipal. However, VivoPower International is 56.25 times more volatile than Invesco Municipal Income. It trades about 0.1 of its potential returns per unit of risk. Invesco Municipal Income is currently generating about 0.1 per unit of risk. If you would invest 84.00 in VivoPower International PLC on August 27, 2024 and sell it today you would earn a total of 8.00 from holding VivoPower International PLC or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VivoPower International PLC vs. Invesco Municipal Income
Performance |
| Timeline |
| VivoPower International |
| Invesco Municipal Income |
VivoPower International and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VivoPower International and Invesco Municipal
The main advantage of trading using opposite VivoPower International and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VivoPower International position performs unexpectedly, Invesco 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 Invesco Municipal will offset losses from the drop in Invesco Municipal's long position.| VivoPower International vs. Emeren Group | VivoPower International vs. Tigo Energy | VivoPower International vs. Sunrun Inc | VivoPower International vs. Sunnova Energy International |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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