Can any of the company-specific risk be diversified away by investing in both Pimco Dynamic and Blackrock International 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 Dynamic and Blackrock International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Dynamic Income and Blackrock International Growth, you can compare the effects of market volatilities on Pimco Dynamic and Blackrock International 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 Dynamic with a short position of Blackrock International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Dynamic and Blackrock International.
Diversification Opportunities for Pimco Dynamic and Blackrock International
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 Dynamic Income and Blackrock International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock International and Pimco Dynamic 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 Dynamic Income are associated (or correlated) with Blackrock International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock International has no effect on the direction of Pimco Dynamic i.e., Pimco Dynamic and Blackrock International go up and down completely randomly.
Pair Corralation between Pimco Dynamic and Blackrock International
Considering the 90-day investment horizon Pimco Dynamic is expected to generate 1.1 times less return on investment than Blackrock International. But when comparing it to its historical volatility, Pimco Dynamic Income is 1.16 times less risky than Blackrock International. It trades about 0.09 of its potential returns per unit of risk. Blackrock International Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 526.00 in Blackrock International Growth on March 5, 2024 and sell it today you would earn a total of 22.00 from holding Blackrock International Growth or generate 4.18% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock International Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Blackrock International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.