Correlation Between Blueprint Medicines and Sage Therapeutic
Can any of the company-specific risk be diversified away by investing in both Blueprint Medicines and Sage Therapeutic 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 Sage Therapeutic 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 Sage Therapeutic, you can compare the effects of market volatilities on Blueprint Medicines and Sage Therapeutic 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 Sage Therapeutic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blueprint Medicines and Sage Therapeutic.
Diversification Opportunities for Blueprint Medicines and Sage Therapeutic
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Blueprint and Sage is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Blueprint Medicines Corp and Sage Therapeutic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Therapeutic 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 Sage Therapeutic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Therapeutic has no effect on the direction of Blueprint Medicines i.e., Blueprint Medicines and Sage Therapeutic go up and down completely randomly.
Pair Corralation between Blueprint Medicines and Sage Therapeutic
Given the investment horizon of 90 days Blueprint Medicines Corp is expected to generate 0.71 times more return on investment than Sage Therapeutic. However, Blueprint Medicines Corp is 1.4 times less risky than Sage Therapeutic. It trades about 0.06 of its potential returns per unit of risk. Sage Therapeutic is currently generating about -0.06 per unit of risk. If you would invest 4,660 in Blueprint Medicines Corp on September 3, 2024 and sell it today you would earn a total of 5,102 from holding Blueprint Medicines Corp or generate 109.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blueprint Medicines Corp vs. Sage Therapeutic
Performance |
| Timeline |
| Blueprint Medicines Corp |
| Sage Therapeutic |
Blueprint Medicines and Sage Therapeutic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blueprint Medicines and Sage Therapeutic
The main advantage of trading using opposite Blueprint Medicines and Sage Therapeutic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blueprint Medicines position performs unexpectedly, Sage Therapeutic 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 Sage Therapeutic will offset losses from the drop in Sage Therapeutic's long position.| Blueprint Medicines vs. Terns Pharmaceuticals | Blueprint Medicines vs. Amylyx Pharmaceuticals | Blueprint Medicines vs. Acumen Pharmaceuticals | Blueprint Medicines vs. Inozyme Pharma |
| Sage Therapeutic vs. Apellis Pharmaceuticals | Sage Therapeutic vs. Terns Pharmaceuticals | Sage Therapeutic vs. Day One Biopharmaceuticals | Sage Therapeutic vs. Blueprint Medicines Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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