Correlation Between Blueprint Medicines and IVERIC Bio

Can any of the company-specific risk be diversified away by investing in both Blueprint Medicines and IVERIC Bio 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 IVERIC Bio 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 IVERIC Bio, you can compare the effects of market volatilities on Blueprint Medicines and IVERIC Bio 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 IVERIC Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blueprint Medicines and IVERIC Bio.

Diversification Opportunities for Blueprint Medicines and IVERIC Bio

0.54

Correlation Coefficient

Blueprint Medicines  IVERIC Bio

Very weak diversification

The 3 months correlation between Blueprint and IVERIC is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Blueprint Medicines Corp and IVERIC Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IVERIC Bio 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 IVERIC Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IVERIC Bio has no effect on the direction of Blueprint Medicines i.e., Blueprint Medicines and IVERIC Bio go up and down completely randomly.

Pair Corralation between Blueprint Medicines and IVERIC Bio

If you would invest  9,046  in Blueprint Medicines Corp on October 25, 2024 and sell it today you would earn a total of  2,062  from holding Blueprint Medicines Corp or generate 22.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	5.56%
Values	Daily Returns

Blueprint Medicines Corp  vs.  IVERIC Bio

Blueprint Medicines Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blueprint Medicines Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Blueprint Medicines exhibited solid returns over the last few months and may actually be approaching a breakup point.

IVERIC Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IVERIC Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, IVERIC Bio is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Blueprint Medicines and IVERIC Bio

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

The idea behind Blueprint Medicines Corp and IVERIC Bio 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.