Correlation Between BlackRock High and PIMCO Intermediate

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

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

Diversification Opportunities for BlackRock High and PIMCO Intermediate

0.9

Correlation Coefficient

BlackRock High  PIMCO Intermediate

Almost no diversification

The 3 months correlation between BlackRock and PIMCO is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock High Yield and PIMCO Intermediate Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Intermediate and BlackRock High 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 High Yield are associated (or correlated) with PIMCO Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Intermediate has no effect on the direction of BlackRock High i.e., BlackRock High and PIMCO Intermediate go up and down completely randomly.

Pair Corralation between BlackRock High and PIMCO Intermediate

Given the investment horizon of 90 days BlackRock High Yield is expected to generate 1.37 times more return on investment than PIMCO Intermediate. However, BlackRock High is 1.37 times more volatile than PIMCO Intermediate Municipal. It trades about 0.02 of its potential returns per unit of risk. PIMCO Intermediate Municipal is currently generating about -0.01 per unit of risk. If you would invest  2,297  in BlackRock High Yield on September 14, 2024 and sell it today you would earn a total of  7.00  from holding BlackRock High Yield or generate 0.3% return on investment over 90 days.

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

BlackRock High Yield  vs.  PIMCO Intermediate Municipal

BlackRock High Yield

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock High Yield are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, BlackRock High is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

PIMCO Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO Intermediate Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, PIMCO Intermediate is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BlackRock High and PIMCO Intermediate

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

The idea behind BlackRock High Yield and PIMCO Intermediate Municipal 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.