Correlation Between Invesco Municipal and MFS Municipal
Can any of the company-specific risk be diversified away by investing in both Invesco Municipal and MFS 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 Invesco Municipal and MFS Municipal 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 MFS Municipal Income, you can compare the effects of market volatilities on Invesco Municipal and MFS 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 Invesco Municipal with a short position of MFS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Municipal and MFS Municipal.
Diversification Opportunities for Invesco Municipal and MFS Municipal
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and MFS is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Municipal Income and MFS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Municipal Income 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 MFS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Municipal Income has no effect on the direction of Invesco Municipal i.e., Invesco Municipal and MFS Municipal go up and down completely randomly.
Pair Corralation between Invesco Municipal and MFS Municipal
Considering the 90-day investment horizon Invesco Municipal Income is expected to under-perform the MFS Municipal. In addition to that, Invesco Municipal is 1.18 times more volatile than MFS Municipal Income. It trades about -0.12 of its total potential returns per unit of risk. MFS Municipal Income is currently generating about -0.06 per unit of volatility. If you would invest 530.00 in MFS Municipal Income on March 28, 2025 and sell it today you would lose (17.00) from holding MFS Municipal Income or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Municipal Income vs. MFS Municipal Income
Performance |
| Timeline |
| Invesco Municipal Income |
| MFS Municipal Income |
Invesco Municipal and MFS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Municipal and MFS Municipal
The main advantage of trading using opposite Invesco Municipal and MFS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Municipal position performs unexpectedly, MFS 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 MFS Municipal will offset losses from the drop in MFS Municipal's long position.| Invesco Municipal vs. DWS Municipal Income | Invesco Municipal vs. MFS Municipal Income | Invesco Municipal vs. MFS High Income | Invesco Municipal vs. Blackrock Muniyield |
| MFS Municipal vs. Eaton Vance National | MFS Municipal vs. Blackrock Muniholdings Ny | MFS Municipal vs. Nuveen California Select | MFS Municipal vs. MFS Investment Grade |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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