Correlation Between Blueprint Medicines and Immunovant

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

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

Diversification Opportunities for Blueprint Medicines and Immunovant

-0.11

Correlation Coefficient

Blueprint Medicines  Immunovant

Good diversification

The 3 months correlation between Blueprint and Immunovant is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Blueprint Medicines Corp and Immunovant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immunovant and Blueprint Medicines 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 Blueprint Medicines Corp are associated (or correlated) with Immunovant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immunovant has no effect on the direction of Blueprint Medicines i.e., Blueprint Medicines and Immunovant go up and down completely randomly.

Pair Corralation between Blueprint Medicines and Immunovant

Given the investment horizon of 90 days Blueprint Medicines Corp is expected to under-perform the Immunovant. But the stock apears to be less risky and, when comparing its historical volatility, Blueprint Medicines Corp is 1.32 times less risky than Immunovant. The stock trades about -0.36 of its potential returns per unit of risk. The Immunovant is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,851  in Immunovant on July 30, 2024 and sell it today you would earn a total of  171.00  from holding Immunovant or generate 6.0% return on investment over 90 days.

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

Blueprint Medicines Corp  vs.  Immunovant

Blueprint Medicines Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blueprint Medicines Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in November 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Immunovant

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Immunovant are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Immunovant may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Blueprint Medicines and Immunovant

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

The idea behind Blueprint Medicines Corp and Immunovant 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.