Correlation Between Stoke Therapeutics and Blueprint Medicines

Can any of the company-specific risk be diversified away by investing in both Stoke 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 Stoke 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 Stoke Therapeutics and Blueprint Medicines Corp, you can compare the effects of market volatilities on Stoke 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 Stoke Therapeutics with a short position of Blueprint Medicines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stoke Therapeutics and Blueprint Medicines.

Diversification Opportunities for Stoke Therapeutics and Blueprint Medicines

-0.04

Correlation Coefficient

Stoke Therapeutics  Blueprint Medicines

Good diversification

The 3 months correlation between Stoke and Blueprint is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Stoke 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 Stoke 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 Stoke 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 Stoke Therapeutics i.e., Stoke Therapeutics and Blueprint Medicines go up and down completely randomly.

Pair Corralation between Stoke Therapeutics and Blueprint Medicines

Given the investment horizon of 90 days Stoke Therapeutics is expected to generate 11.89 times less return on investment than Blueprint Medicines. In addition to that, Stoke Therapeutics is 1.56 times more volatile than Blueprint Medicines Corp. It trades about 0.01 of its total potential returns per unit of risk. Blueprint Medicines Corp is currently generating about 0.09 per unit of volatility. If you would invest  8,410  in Blueprint Medicines Corp on September 12, 2024 and sell it today you would earn a total of  1,129  from holding Blueprint Medicines Corp or generate 13.42% return on investment over 90 days.

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

Stoke Therapeutics  vs.  Blueprint Medicines Corp

Stoke Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stoke Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Stoke Therapeutics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Blueprint Medicines Corp

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blueprint Medicines Corp are ranked lower than 7 (%) 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.

Pair Trading with Stoke Therapeutics and Blueprint Medicines

The main advantage of trading using opposite Stoke Therapeutics and Blueprint Medicines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoke 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 Stoke 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.