Correlation Between Halozyme Therapeutics and Blueprint Medicines

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

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

Diversification Opportunities for Halozyme Therapeutics and Blueprint Medicines

-0.07

Correlation Coefficient

Halozyme Therapeutics  Blueprint Medicines

Good diversification

The 3 months correlation between Halozyme and Blueprint is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Halozyme 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 Halozyme Therapeutics 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 Halozyme 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 Halozyme Therapeutics i.e., Halozyme Therapeutics and Blueprint Medicines go up and down completely randomly.

Pair Corralation between Halozyme Therapeutics and Blueprint Medicines

Given the investment horizon of 90 days Halozyme Therapeutics is expected to generate 0.4 times more return on investment than Blueprint Medicines. However, Halozyme Therapeutics is 2.47 times less risky than Blueprint Medicines. It trades about 0.33 of its potential returns per unit of risk. Blueprint Medicines Corp is currently generating about 0.03 per unit of risk. If you would invest  4,799  in Halozyme Therapeutics on December 30, 2024 and sell it today you would earn a total of  1,585  from holding Halozyme Therapeutics or generate 33.03% return on investment over 90 days.

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

Halozyme Therapeutics  vs.  Blueprint Medicines Corp

Halozyme Therapeutics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Halozyme Therapeutics are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Halozyme Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

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 sound primary indicators, Blueprint Medicines is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Halozyme Therapeutics and Blueprint Medicines

The main advantage of trading using opposite Halozyme Therapeutics and Blueprint Medicines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halozyme Therapeutics 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 Halozyme 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.