Correlation Between Blueprint Medicines and PennyMac Finl

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

Diversification Opportunities for Blueprint Medicines and PennyMac Finl

0.03

Correlation Coefficient

Blueprint Medicines  PennyMac Finl

Significant diversification

The 3 months correlation between Blueprint and PennyMac is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Blueprint Medicines Corp and PennyMac Finl Svcs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Finl Svcs 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 PennyMac Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennyMac Finl Svcs has no effect on the direction of Blueprint Medicines i.e., Blueprint Medicines and PennyMac Finl go up and down completely randomly.

Pair Corralation between Blueprint Medicines and PennyMac Finl

Given the investment horizon of 90 days Blueprint Medicines Corp is expected to generate 1.65 times more return on investment than PennyMac Finl. However, Blueprint Medicines is 1.65 times more volatile than PennyMac Finl Svcs. It trades about 0.06 of its potential returns per unit of risk. PennyMac Finl Svcs is currently generating about 0.07 per unit of risk. If you would invest  5,355  in Blueprint Medicines Corp on October 4, 2024 and sell it today you would earn a total of  3,365  from holding Blueprint Medicines Corp or generate 62.84% return on investment over 90 days.

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

Blueprint Medicines Corp  vs.  PennyMac Finl Svcs

Blueprint Medicines Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

PennyMac Finl Svcs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PennyMac Finl Svcs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, PennyMac Finl is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Blueprint Medicines and PennyMac Finl

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

The idea behind Blueprint Medicines Corp and PennyMac Finl Svcs 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 CEOs Directory module to screen CEOs from public companies around the world.