Correlation Between BlackRock Core and Pimco Income

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

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

Diversification Opportunities for BlackRock Core and Pimco Income

0.79

Correlation Coefficient

BlackRock Core  Pimco Income

Poor diversification

The 3 months correlation between BlackRock and Pimco is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Core Bond and Pimco Income Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income Strategy and BlackRock Core 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 Core Bond are associated (or correlated) with Pimco Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Income Strategy has no effect on the direction of BlackRock Core i.e., BlackRock Core and Pimco Income go up and down completely randomly.

Pair Corralation between BlackRock Core and Pimco Income

Considering the 90-day investment horizon BlackRock Core Bond is expected to generate 2.35 times more return on investment than Pimco Income. However, BlackRock Core is 2.35 times more volatile than Pimco Income Strategy. It trades about 0.12 of its potential returns per unit of risk. Pimco Income Strategy is currently generating about 0.25 per unit of risk. If you would invest  1,017  in BlackRock Core Bond on December 29, 2024 and sell it today you would earn a total of  49.00  from holding BlackRock Core Bond or generate 4.82% return on investment over 90 days.

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

BlackRock Core Bond  vs.  Pimco Income Strategy

BlackRock Core Bond

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Core Bond are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, BlackRock Core is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pimco Income Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy technical and fundamental indicators, Pimco Income is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BlackRock Core and Pimco Income

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

The idea behind BlackRock Core Bond and Pimco Income Strategy 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.