Correlation Between Invesco Municipal and Nuveen All
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Nuveen All 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 Nuveen All 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 Nuveen All American Municipal, you can compare the effects of market volatilities on Invesco Municipal and Nuveen All 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 Nuveen All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Nuveen All.
Diversification Opportunities for Invesco Municipal and Nuveen All
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and Nuveen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Nuveen All American Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen All American 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 Nuveen All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen All American has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Nuveen All go up and down completely randomly.
Pair Corralation between Invesco Municipal and Nuveen All
Assuming the 90 days horizon Invesco Municipal Income is expected to generate 1.06 times more return on investment than Nuveen All. However, Invesco Municipal is 1.06 times more volatile than Nuveen All American Municipal. It trades about 0.03 of its potential returns per unit of risk. Nuveen All American Municipal is currently generating about 0.03 per unit of risk. If you would invest 1,135 in Invesco Municipal Income on January 26, 2024 and sell it today you would earn a total of 52.00 from holding Invesco Municipal Income or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Income vs. Nuveen All American Municipal
Performance |
| Timeline |
| Invesco Municipal |
| Nuveen All American |
Invesco Municipal and Nuveen All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Nuveen All
The main advantage of trading using opposite Invesco Municipal and Nuveen All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Nuveen All 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 Nuveen All will offset losses from the drop in Nuveen All's long position.| Invesco Municipal vs. Vanguard High Yield Tax Exempt | Invesco Municipal vs. Vanguard Long Term Tax Exempt | Invesco Municipal vs. Franklin Federal Tax Free | Invesco Municipal vs. Franklin Federal Tax Free |
| Nuveen All vs. Vanguard Long Term Tax Exempt | Nuveen All vs. Vanguard High Yield Tax Exempt | Nuveen All vs. Strategic Advisers Municipal |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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