Correlation Between BlackRock California and Pimco California
Can any of the company-specific risk be diversified away by investing in both BlackRock California and Pimco California 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 California and Pimco California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock California Municipal and Pimco California Municipal, you can compare the effects of market volatilities on BlackRock California and Pimco California 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 California with a short position of Pimco California. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock California and Pimco California.
Diversification Opportunities for BlackRock California and Pimco California
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BlackRock and Pimco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock California Municipal and Pimco California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco California Mun and BlackRock California 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 California Municipal are associated (or correlated) with Pimco California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco California Mun has no effect on the direction of BlackRock California i.e., BlackRock California and Pimco California go up and down completely randomly.
Pair Corralation between BlackRock California and Pimco California
Considering the 90-day investment horizon BlackRock California is expected to generate 1.95 times less return on investment than Pimco California. But when comparing it to its historical volatility, BlackRock California Municipal is 1.08 times less risky than Pimco California. It trades about 0.06 of its potential returns per unit of risk. Pimco California Municipal is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 559.00 in Pimco California Municipal on September 1, 2024 and sell it today you would earn a total of 40.00 from holding Pimco California Municipal or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock California Municipal vs. Pimco California Municipal
Performance |
| Timeline |
| BlackRock California |
| Pimco California Mun |
BlackRock California and Pimco California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock California and Pimco California
The main advantage of trading using opposite BlackRock California and Pimco California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock California position performs unexpectedly, Pimco California 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 California will offset losses from the drop in Pimco California's long position.| BlackRock California vs. Blackrock Muniyield Quality | BlackRock California vs. Blackrock Muni Intermediate | BlackRock California vs. Nuveen California Amt | BlackRock California vs. Munivest Fund |
| Pimco California vs. Pimco California Municipal | Pimco California vs. Nuveen California Amt | Pimco California vs. Eaton Vance California | Pimco California vs. Invesco California Value |
Check out your portfolio center.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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