Correlation Between Pimco Municipal and Blackrock Muniyield

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

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

Diversification Opportunities for Pimco Municipal and Blackrock Muniyield

0.62

Correlation Coefficient

Pimco Municipal  Blackrock Muniyield

Poor diversification

The 3 months correlation between Pimco and Blackrock is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Municipal Income and Blackrock Muniyield Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield and Pimco Municipal 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 Pimco Municipal Income are associated (or correlated) with Blackrock Muniyield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniyield has no effect on the direction of Pimco Municipal i.e., Pimco Municipal and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between Pimco Municipal and Blackrock Muniyield

Considering the 90-day investment horizon Pimco Municipal Income is expected to generate 1.67 times more return on investment than Blackrock Muniyield. However, Pimco Municipal is 1.67 times more volatile than Blackrock Muniyield Quality. It trades about 0.04 of its potential returns per unit of risk. Blackrock Muniyield Quality is currently generating about 0.04 per unit of risk. If you would invest  939.00  in Pimco Municipal Income on September 5, 2024 and sell it today you would earn a total of  20.00  from holding Pimco Municipal Income or generate 2.13% return on investment over 90 days.

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

Pimco Municipal Income  vs.  Blackrock Muniyield Quality

Pimco Municipal Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Municipal Income are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable primary indicators, Pimco Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Blackrock Muniyield

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniyield Quality are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Muniyield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pimco Municipal and Blackrock Muniyield

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

The idea behind Pimco Municipal Income and Blackrock Muniyield Quality 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.