Correlation Between Blackrock Enhanced and Pimco Corporate

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

By analyzing existing cross correlation between Blackrock Enhanced Equity and Pimco Corporate Income, you can compare the effects of market volatilities on Blackrock Enhanced and Pimco Corporate 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 Enhanced with a short position of Pimco Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Enhanced and Pimco Corporate.

Diversification Opportunities for Blackrock Enhanced and Pimco Corporate

0.61

Correlation Coefficient

Blackrock Enhanced  Pimco Corporate

Poor diversification

The 3 months correlation between Blackrock and Pimco is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Equity and Pimco Corporate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Corporate Income and Blackrock Enhanced 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 Enhanced Equity are associated (or correlated) with Pimco Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Corporate Income has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and Pimco Corporate go up and down completely randomly.

Pair Corralation between Blackrock Enhanced and Pimco Corporate

Considering the 90-day investment horizon Blackrock Enhanced Equity is expected to generate 1.64 times more return on investment than Pimco Corporate. However, Blackrock Enhanced is 1.64 times more volatile than Pimco Corporate Income. It trades about 0.15 of its potential returns per unit of risk. Pimco Corporate Income is currently generating about 0.22 per unit of risk. If you would invest  836.00  in Blackrock Enhanced Equity on August 31, 2024 and sell it today you would earn a total of  61.00  from holding Blackrock Enhanced Equity or generate 7.3% return on investment over 90 days.

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

Blackrock Enhanced Equity  vs.  Pimco Corporate Income

Blackrock Enhanced Equity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Enhanced Equity are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively weak fundamental indicators, Blackrock Enhanced may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pimco Corporate Income

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Corporate Income are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of very inconsistent fundamental indicators, Pimco Corporate may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Blackrock Enhanced and Pimco Corporate

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

The idea behind Blackrock Enhanced Equity and Pimco Corporate Income 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.