Correlation Between Invesco Municipal and Mainstay Tax
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and Mainstay Tax 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 Mainstay Tax 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 Mainstay Tax Free, you can compare the effects of market volatilities on Invesco Municipal and Mainstay Tax 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 Mainstay Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and Mainstay Tax.
Diversification Opportunities for Invesco Municipal and Mainstay Tax
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and Mainstay is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and Mainstay Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Tax Free 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 Mainstay Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Tax Free has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and Mainstay Tax go up and down completely randomly.
Pair Corralation between Invesco Municipal and Mainstay Tax
Assuming the 90 days horizon Invesco Municipal Income is expected to generate 1.28 times more return on investment than Mainstay Tax. However, Invesco Municipal is 1.28 times more volatile than Mainstay Tax Free. It trades about 0.07 of its potential returns per unit of risk. Mainstay Tax Free is currently generating about 0.07 per unit of risk. If you would invest 1,131 in Invesco Municipal Income on January 19, 2024 and sell it today you would earn a total of 56.00 from holding Invesco Municipal Income or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Income vs. Mainstay Tax Free
Performance |
| Timeline |
| Invesco Municipal |
| Mainstay Tax Free |
Invesco Municipal and Mainstay Tax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and Mainstay Tax
The main advantage of trading using opposite Invesco Municipal and Mainstay Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, Mainstay Tax 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 Mainstay Tax will offset losses from the drop in Mainstay Tax'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 |
| Mainstay Tax vs. Vanguard Long Term Tax Exempt | Mainstay Tax vs. Vanguard High Yield Tax Exempt | Mainstay Tax 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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