Correlation Between HCW Biologics and Blueprint Medicines

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Can any of the company-specific risk be diversified away by investing in both HCW Biologics 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 HCW Biologics and Blueprint Medicines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCW Biologics and Blueprint Medicines Corp, you can compare the effects of market volatilities on HCW Biologics 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 HCW Biologics with a short position of Blueprint Medicines. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCW Biologics and Blueprint Medicines.

Diversification Opportunities for HCW Biologics and Blueprint Medicines

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between HCW and Blueprint is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding HCW Biologics 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 HCW Biologics 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 HCW Biologics 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 HCW Biologics i.e., HCW Biologics and Blueprint Medicines go up and down completely randomly.

Pair Corralation between HCW Biologics and Blueprint Medicines

Given the investment horizon of 90 days HCW Biologics is expected to under-perform the Blueprint Medicines. But the stock apears to be less risky and, when comparing its historical volatility, HCW Biologics is 1.32 times less risky than Blueprint Medicines. The stock trades about -0.1 of its potential returns per unit of risk. The Blueprint Medicines Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  9,033  in Blueprint Medicines Corp on October 22, 2024 and sell it today you would earn a total of  1,972  from holding Blueprint Medicines Corp or generate 21.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

HCW Biologics  vs.  Blueprint Medicines Corp

 Performance 
       Timeline  
HCW Biologics 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in HCW Biologics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HCW Biologics sustained solid returns over the last few months and may actually be approaching a breakup point.
Blueprint Medicines Corp 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Blueprint Medicines Corp are ranked lower than 10 (%) 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.

HCW Biologics and Blueprint Medicines Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HCW Biologics and Blueprint Medicines

The main advantage of trading using opposite HCW Biologics and Blueprint Medicines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCW Biologics 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 HCW Biologics 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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