Correlation Between Incyte and Blueprint Medicines

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

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

Diversification Opportunities for Incyte and Blueprint Medicines

0.5

Correlation Coefficient

Incyte  Blueprint Medicines

Very weak diversification

The 3 months correlation between Incyte and Blueprint is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Incyte 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 Incyte 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 Incyte 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 Incyte i.e., Incyte and Blueprint Medicines go up and down completely randomly.

Pair Corralation between Incyte and Blueprint Medicines

Given the investment horizon of 90 days Incyte is expected to under-perform the Blueprint Medicines. But the stock apears to be less risky and, when comparing its historical volatility, Incyte is 1.64 times less risky than Blueprint Medicines. The stock trades about -0.08 of its potential returns per unit of risk. The Blueprint Medicines Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  8,682  in Blueprint Medicines Corp on December 30, 2024 and sell it today you would earn a total of  190.00  from holding Blueprint Medicines Corp or generate 2.19% return on investment over 90 days.

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

Incyte  vs.  Blueprint Medicines Corp

Incyte

Risk-Adjusted Performance

Very Weak

Over the last 90 days Incyte has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 Incyte and Blueprint Medicines

The main advantage of trading using opposite Incyte and Blueprint Medicines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Incyte 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 Incyte 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.