Correlation Between Blackrock Enhanced and Pimco Global

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

By analyzing existing cross correlation between Blackrock Enhanced Capital and Pimco Global Stocksplus, you can compare the effects of market volatilities on Blackrock Enhanced and Pimco Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Enhanced and Pimco Global.

Diversification Opportunities for Blackrock Enhanced and Pimco Global

-0.25

Correlation Coefficient

Blackrock Enhanced  Pimco Global

Very good diversification

The 3 months correlation between Blackrock and Pimco is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Capital and Pimco Global Stocksplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Global Stocksplus 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 Capital are associated (or correlated) with Pimco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Global Stocksplus has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and Pimco Global go up and down completely randomly.

Pair Corralation between Blackrock Enhanced and Pimco Global

Considering the 90-day investment horizon Blackrock Enhanced Capital is expected to under-perform the Pimco Global. In addition to that, Blackrock Enhanced is 1.4 times more volatile than Pimco Global Stocksplus. It trades about -0.07 of its total potential returns per unit of risk. Pimco Global Stocksplus is currently generating about 0.14 per unit of volatility. If you would invest  764.00  in Pimco Global Stocksplus on December 28, 2024 and sell it today you would earn a total of  41.00  from holding Pimco Global Stocksplus or generate 5.37% return on investment over 90 days.

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

Blackrock Enhanced Capital  vs.  Pimco Global Stocksplus

Blackrock Enhanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Enhanced Capital has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong forward indicators, Blackrock Enhanced is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pimco Global Stocksplus

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Global Stocksplus are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable technical and fundamental indicators, Pimco Global is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Blackrock Enhanced and Pimco Global

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

The idea behind Blackrock Enhanced Capital and Pimco Global Stocksplus 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.