Correlation Between Blackrock Muni and Pimco Municipal

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

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

Diversification Opportunities for Blackrock Muni and Pimco Municipal

-0.09

Correlation Coefficient

Blackrock Muni  Pimco Municipal

Good diversification

The 3 months correlation between Blackrock and Pimco is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muni Intermediate and Pimco Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Municipal Income and Blackrock Muni 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 Muni Intermediate are associated (or correlated) with Pimco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Municipal Income has no effect on the direction of Blackrock Muni i.e., Blackrock Muni and Pimco Municipal go up and down completely randomly.

Pair Corralation between Blackrock Muni and Pimco Municipal

Considering the 90-day investment horizon Blackrock Muni Intermediate is expected to generate 0.59 times more return on investment than Pimco Municipal. However, Blackrock Muni Intermediate is 1.69 times less risky than Pimco Municipal. It trades about 0.1 of its potential returns per unit of risk. Pimco Municipal Income is currently generating about -0.07 per unit of risk. If you would invest  1,233  in Blackrock Muni Intermediate on September 12, 2024 and sell it today you would earn a total of  42.00  from holding Blackrock Muni Intermediate or generate 3.41% return on investment over 90 days.

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

Blackrock Muni Intermediate  vs.  Pimco Municipal Income

Blackrock Muni Inter

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muni Intermediate are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Blackrock Muni is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pimco Municipal Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Municipal Income has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent primary indicators, Pimco Municipal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Blackrock Muni and Pimco Municipal

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

The idea behind Blackrock Muni Intermediate and Pimco Municipal 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.