Correlation Between Blackrock Enhanced and Pimco Strategic

Can any of the company-specific risk be diversified away by investing in both Blackrock Enhanced and Pimco Strategic 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 Strategic 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 Strategic Income, you can compare the effects of market volatilities on Blackrock Enhanced and Pimco Strategic 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 Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Enhanced and Pimco Strategic.

Diversification Opportunities for Blackrock Enhanced and Pimco Strategic

0.01

Correlation Coefficient

Blackrock Enhanced  Pimco Strategic

Significant diversification

The 3 months correlation between Blackrock and Pimco is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Capital and Pimco Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Strategic 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 Capital are associated (or correlated) with Pimco Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Strategic Income has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and Pimco Strategic go up and down completely randomly.

Pair Corralation between Blackrock Enhanced and Pimco Strategic

Considering the 90-day investment horizon Blackrock Enhanced Capital is expected to generate 0.26 times more return on investment than Pimco Strategic. However, Blackrock Enhanced Capital is 3.85 times less risky than Pimco Strategic. It trades about -0.07 of its potential returns per unit of risk. Pimco Strategic Income is currently generating about -0.05 per unit of risk. If you would invest  1,971  in Blackrock Enhanced Capital on December 28, 2024 and sell it today you would lose (83.00) from holding Blackrock Enhanced Capital or give up 4.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Blackrock Enhanced Capital  vs.  Pimco Strategic Income

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 Strategic Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pimco Strategic Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the fund private investors.

Pair Trading with Blackrock Enhanced and Pimco Strategic

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

The idea behind Blackrock Enhanced Capital and Pimco Strategic 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.