Correlation Between Blueprint Medicines and Karuna Therapeutics

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

Diversification Opportunities for Blueprint Medicines and Karuna Therapeutics

0.0

Correlation Coefficient

Blueprint Medicines  Karuna Therapeutics

Pay attention - limited upside

The 3 months correlation between Blueprint and Karuna is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Blueprint Medicines Corp and Karuna Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karuna Therapeutics 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 Karuna Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karuna Therapeutics has no effect on the direction of Blueprint Medicines i.e., Blueprint Medicines and Karuna Therapeutics go up and down completely randomly.

Pair Corralation between Blueprint Medicines and Karuna Therapeutics

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	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Blueprint Medicines Corp  vs.  Karuna Therapeutics

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.

Karuna Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Karuna Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Karuna Therapeutics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blueprint Medicines and Karuna Therapeutics

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

The idea behind Blueprint Medicines Corp and Karuna Therapeutics 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.