Correlation Between Monte Rosa and Blueprint Medicines

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

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

Diversification Opportunities for Monte Rosa and Blueprint Medicines

-0.24

Correlation Coefficient

Monte Rosa  Blueprint Medicines

Very good diversification

The 3 months correlation between Monte and Blueprint is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Monte Rosa Therapeutics and Blueprint Medicines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blueprint Medicines Corp and Monte Rosa 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 Monte Rosa Therapeutics are associated (or correlated) with Blueprint Medicines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blueprint Medicines Corp has no effect on the direction of Monte Rosa i.e., Monte Rosa and Blueprint Medicines go up and down completely randomly.

Pair Corralation between Monte Rosa and Blueprint Medicines

Given the investment horizon of 90 days Monte Rosa Therapeutics is expected to under-perform the Blueprint Medicines. In addition to that, Monte Rosa is 1.32 times more volatile than Blueprint Medicines Corp. It trades about -0.09 of its total potential returns per unit of risk. Blueprint Medicines Corp is currently generating about 0.03 per unit of volatility. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Monte Rosa Therapeutics  vs.  Blueprint Medicines Corp

Monte Rosa Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monte Rosa Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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.

Pair Trading with Monte Rosa and Blueprint Medicines

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

The idea behind Monte Rosa Therapeutics and Blueprint Medicines Corp 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.