Correlation Between Pimco Income and Blackrock Enhanced

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

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

Diversification Opportunities for Pimco Income and Blackrock Enhanced

0.61

Correlation Coefficient

Pimco Income  Blackrock Enhanced

Poor diversification

The 3 months correlation between Pimco and Blackrock is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and Blackrock Enhanced Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Enhanced Equity and Pimco Income 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 Income Strategy are associated (or correlated) with Blackrock Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Enhanced Equity has no effect on the direction of Pimco Income i.e., Pimco Income and Blackrock Enhanced go up and down completely randomly.

Pair Corralation between Pimco Income and Blackrock Enhanced

Considering the 90-day investment horizon Pimco Income is expected to generate 1.51 times less return on investment than Blackrock Enhanced. But when comparing it to its historical volatility, Pimco Income Strategy is 2.04 times less risky than Blackrock Enhanced. It trades about 0.2 of its potential returns per unit of risk. Blackrock Enhanced Equity is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  836.00  in Blackrock Enhanced Equity on September 2, 2024 and sell it today you would earn a total of  63.00  from holding Blackrock Enhanced Equity or generate 7.54% return on investment over 90 days.

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

Pimco Income Strategy  vs.  Blackrock Enhanced Equity

Pimco Income Strategy

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy technical and fundamental indicators, Pimco Income is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Blackrock Enhanced Equity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Enhanced Equity are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively unsteady fundamental indicators, Blackrock Enhanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pimco Income and Blackrock Enhanced

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

The idea behind Pimco Income Strategy and Blackrock Enhanced Equity 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.