Correlation Between Invesco Municipal and Invesco Government
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Invesco Government 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 Government 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 Government, you can compare the effects of market volatilities on Invesco Municipal and Invesco Government 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 Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Invesco Government.
Diversification Opportunities for Invesco Municipal and Invesco Government
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Invesco and Invesco is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Invesco Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Government 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 Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Government has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Invesco Government go up and down completely randomly.
Pair Corralation between Invesco Municipal and Invesco Government
Assuming the 90 days horizon Invesco Municipal Income is expected to under-perform the Invesco Government. In addition to that, Invesco Municipal is 2.01 times more volatile than Invesco Government. It trades about -0.08 of its total potential returns per unit of risk. Invesco Government is currently generating about 0.05 per unit of volatility. If you would invest 693.00 in Invesco Government on September 24, 2024 and sell it today you would earn a total of 3.00 from holding Invesco Government or generate 0.43% 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 Government
Performance |
Timeline |
Invesco Municipal Income |
Invesco Government |
Invesco Municipal and Invesco Government Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Invesco Municipal and Invesco Government
The main advantage of trading using opposite Invesco Municipal and Invesco Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Invesco Government 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 Government will offset losses from the drop in Invesco Government's long position.Invesco Municipal vs. Invesco Municipal Income | Invesco Municipal vs. Invesco Municipal Income | Invesco Municipal vs. Oppenheimer Rising Dividends | Invesco Municipal vs. Invesco High Yield |
Invesco Government vs. Invesco Municipal Income | Invesco Government vs. Invesco Municipal Income | Invesco Government vs. Invesco Municipal Income | Invesco Government vs. Oppenheimer Rising Dividends |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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