Correlation Between Intel and Invesco Municipal

Can any of the company-specific risk be diversified away by investing in both Intel 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 Intel and Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intel and Invesco Municipal Trust, you can compare the effects of market volatilities on Intel 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 Intel with a short position of Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Invesco Municipal.

Diversification Opportunities for Intel and Invesco Municipal

-0.25

Correlation Coefficient

Intel  Invesco Municipal

Very good diversification

The 3 months correlation between Intel and Invesco is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Invesco Municipal Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Trust and Intel 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 Intel 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 Trust has no effect on the direction of Intel i.e., Intel and Invesco Municipal go up and down completely randomly.

Pair Corralation between Intel and Invesco Municipal

Given the investment horizon of 90 days Intel is expected to generate 4.89 times more return on investment than Invesco Municipal. However, Intel is 4.89 times more volatile than Invesco Municipal Trust. It trades about 0.14 of its potential returns per unit of risk. Invesco Municipal Trust is currently generating about 0.08 per unit of risk. If you would invest  1,943  in Intel on September 4, 2024 and sell it today you would earn a total of  450.00  from holding Intel or generate 23.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Intel  vs.  Invesco Municipal Trust

Intel

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Invesco Municipal Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Municipal Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking signals, Invesco Municipal is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Intel and Invesco Municipal

The main advantage of trading using opposite Intel and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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.

The idea behind Intel and Invesco Municipal Trust 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.