Correlation Between Blackrock Muni and Invesco Advantage

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

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

Diversification Opportunities for Blackrock Muni and Invesco Advantage

0.71

Correlation Coefficient

Blackrock Muni  Invesco Advantage

Poor diversification

The 3 months correlation between Blackrock and Invesco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muni Intermediate and Invesco Advantage MIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Advantage MIT and Blackrock Muni 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 Blackrock Muni Intermediate are associated (or correlated) with Invesco Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Advantage MIT has no effect on the direction of Blackrock Muni i.e., Blackrock Muni and Invesco Advantage go up and down completely randomly.

Pair Corralation between Blackrock Muni and Invesco Advantage

Considering the 90-day investment horizon Blackrock Muni is expected to generate 1.23 times less return on investment than Invesco Advantage. But when comparing it to its historical volatility, Blackrock Muni Intermediate is 1.79 times less risky than Invesco Advantage. It trades about 0.21 of its potential returns per unit of risk. Invesco Advantage MIT is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  873.00  in Invesco Advantage MIT on July 18, 2024 and sell it today you would earn a total of  38.00  from holding Invesco Advantage MIT or generate 4.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Blackrock Muni Intermediate  vs.  Invesco Advantage MIT

Blackrock Muni Inter

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muni Intermediate are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Blackrock Muni is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Invesco Advantage MIT

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Advantage MIT are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Invesco Advantage is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Blackrock Muni and Invesco Advantage

The main advantage of trading using opposite Blackrock Muni and Invesco Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muni position performs unexpectedly, Invesco Advantage 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 Advantage will offset losses from the drop in Invesco Advantage's long position.

The idea behind Blackrock Muni Intermediate and Invesco Advantage MIT 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.