Correlation Between Blueprint Medicines and Agios Pharm

Can any of the company-specific risk be diversified away by investing in both Blueprint Medicines and Agios Pharm 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 Blueprint Medicines and Agios Pharm into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blueprint Medicines Corp and Agios Pharm, you can compare the effects of market volatilities on Blueprint Medicines and Agios Pharm 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 Blueprint Medicines with a short position of Agios Pharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blueprint Medicines and Agios Pharm.

Diversification Opportunities for Blueprint Medicines and Agios Pharm

0.25

Correlation Coefficient

Blueprint Medicines  Agios Pharm

Modest diversification

The 3 months correlation between Blueprint and Agios is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Blueprint Medicines Corp and Agios Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agios Pharm and Blueprint Medicines 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 Blueprint Medicines Corp are associated (or correlated) with Agios Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agios Pharm has no effect on the direction of Blueprint Medicines i.e., Blueprint Medicines and Agios Pharm go up and down completely randomly.

Pair Corralation between Blueprint Medicines and Agios Pharm

Given the investment horizon of 90 days Blueprint Medicines Corp is expected to generate 1.4 times more return on investment than Agios Pharm. However, Blueprint Medicines is 1.4 times more volatile than Agios Pharm. It trades about 0.03 of its potential returns per unit of risk. Agios Pharm is currently generating about -0.04 per unit of risk. If you would invest  8,682  in Blueprint Medicines Corp on December 29, 2024 and sell it today you would earn a total of  291.00  from holding Blueprint Medicines Corp or generate 3.35% return on investment over 90 days.

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

Blueprint Medicines Corp  vs.  Agios Pharm

Blueprint Medicines Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blueprint Medicines Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Blueprint Medicines may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Agios Pharm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agios Pharm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Blueprint Medicines and Agios Pharm

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

The idea behind Blueprint Medicines Corp and Agios Pharm 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.