Correlation Between Blueprint Medicines and BridgeBio Pharma
Can any of the company-specific risk be diversified away by investing in both Blueprint Medicines and BridgeBio Pharma 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 BridgeBio Pharma 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 BridgeBio Pharma, you can compare the effects of market volatilities on Blueprint Medicines and BridgeBio Pharma 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 BridgeBio Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blueprint Medicines and BridgeBio Pharma.
Diversification Opportunities for Blueprint Medicines and BridgeBio Pharma
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Blueprint and BridgeBio is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Blueprint Medicines Corp and BridgeBio Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BridgeBio Pharma 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 BridgeBio Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BridgeBio Pharma has no effect on the direction of Blueprint Medicines i.e., Blueprint Medicines and BridgeBio Pharma go up and down completely randomly.
Pair Corralation between Blueprint Medicines and BridgeBio Pharma
Given the investment horizon of 90 days Blueprint Medicines Corp is expected to generate 0.66 times more return on investment than BridgeBio Pharma. However, Blueprint Medicines Corp is 1.52 times less risky than BridgeBio Pharma. It trades about 0.2 of its potential returns per unit of risk. BridgeBio Pharma is currently generating about 0.13 per unit of risk. If you would invest 8,340 in Blueprint Medicines Corp on August 30, 2024 and sell it today you would earn a total of 1,170 from holding Blueprint Medicines Corp or generate 14.03% 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. BridgeBio Pharma
Performance |
| Timeline |
| Blueprint Medicines Corp |
| BridgeBio Pharma |
Blueprint Medicines and BridgeBio Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blueprint Medicines and BridgeBio Pharma
The main advantage of trading using opposite Blueprint Medicines and BridgeBio Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blueprint Medicines position performs unexpectedly, BridgeBio Pharma 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 BridgeBio Pharma will offset losses from the drop in BridgeBio Pharma's long position.| Blueprint Medicines vs. Terns Pharmaceuticals | Blueprint Medicines vs. Amylyx Pharmaceuticals | Blueprint Medicines vs. Acumen Pharmaceuticals | Blueprint Medicines vs. Inozyme Pharma |
| BridgeBio Pharma vs. Blueprint Medicines Corp | BridgeBio Pharma vs. Amylyx Pharmaceuticals | BridgeBio Pharma vs. Day One Biopharmaceuticals | BridgeBio Pharma vs. Terns Pharmaceuticals |
Check out your portfolio center.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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