Correlation Between BlackRock Science and PIMCO RAFI

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

By analyzing existing cross correlation between BlackRock Science Tech and PIMCO RAFI Dynamic, you can compare the effects of market volatilities on BlackRock Science and PIMCO RAFI 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 Science with a short position of PIMCO RAFI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Science and PIMCO RAFI.

Diversification Opportunities for BlackRock Science and PIMCO RAFI

-0.2

Correlation Coefficient

BlackRock Science  PIMCO RAFI

Good diversification

The 3 months correlation between BlackRock and PIMCO is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Science Tech and PIMCO RAFI Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO RAFI Dynamic and BlackRock Science 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 Science Tech are associated (or correlated) with PIMCO RAFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO RAFI Dynamic has no effect on the direction of BlackRock Science i.e., BlackRock Science and PIMCO RAFI go up and down completely randomly.

Pair Corralation between BlackRock Science and PIMCO RAFI

Considering the 90-day investment horizon BlackRock Science Tech is expected to generate 1.8 times more return on investment than PIMCO RAFI. However, BlackRock Science is 1.8 times more volatile than PIMCO RAFI Dynamic. It trades about 0.13 of its potential returns per unit of risk. PIMCO RAFI Dynamic is currently generating about 0.1 per unit of risk. If you would invest  3,654  in BlackRock Science Tech on October 22, 2024 and sell it today you would earn a total of  92.00  from holding BlackRock Science Tech or generate 2.52% return on investment over 90 days.

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

BlackRock Science Tech  vs.  PIMCO RAFI Dynamic

BlackRock Science Tech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Science Tech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock Science is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

PIMCO RAFI Dynamic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO RAFI Dynamic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, PIMCO RAFI is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BlackRock Science and PIMCO RAFI

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

The idea behind BlackRock Science Tech and PIMCO RAFI Dynamic 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.