Correlation Between Westwood Holdings and Invesco Quality
Can any of the company-specific risk be diversified away by investing in both Westwood Holdings 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 Westwood Holdings and Invesco Quality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Holdings Group and Invesco Quality Municipal, you can compare the effects of market volatilities on Westwood Holdings 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 Westwood Holdings with a short position of Invesco Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Holdings and Invesco Quality.
Diversification Opportunities for Westwood Holdings and Invesco Quality
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westwood and Invesco is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Holdings Group and Invesco Quality Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Quality Municipal and Westwood Holdings 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 Westwood Holdings Group 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 Municipal has no effect on the direction of Westwood Holdings i.e., Westwood Holdings and Invesco Quality go up and down completely randomly.
Pair Corralation between Westwood Holdings and Invesco Quality
Considering the 90-day investment horizon Westwood Holdings Group is expected to generate 3.38 times more return on investment than Invesco Quality. However, Westwood Holdings is 3.38 times more volatile than Invesco Quality Municipal. It trades about 0.17 of its potential returns per unit of risk. Invesco Quality Municipal is currently generating about 0.25 per unit of risk. If you would invest 1,446 in Westwood Holdings Group on September 3, 2024 and sell it today you would earn a total of 103.00 from holding Westwood Holdings Group or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westwood Holdings Group vs. Invesco Quality Municipal
Performance |
| Timeline |
| Westwood Holdings |
| Invesco Quality Municipal |
Westwood Holdings and Invesco Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Holdings and Invesco Quality
The main advantage of trading using opposite Westwood Holdings and Invesco Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Holdings 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.| Westwood Holdings vs. MFS Investment Grade | Westwood Holdings vs. Eaton Vance National | Westwood Holdings vs. Invesco Trust For | Westwood Holdings vs. Invesco California Value |
| Invesco Quality vs. MFS Municipal Income | Invesco Quality vs. Blackrock Muniyield | Invesco Quality vs. MFS High Income | Invesco Quality vs. MFS High Yield |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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