Correlation Between Karuna Therapeutics and Blueprint Medicines
Can any of the company-specific risk be diversified away by investing in both Karuna 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 Karuna 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 Karuna Therapeutics and Blueprint Medicines Corp, you can compare the effects of market volatilities on Karuna 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 Karuna Therapeutics with a short position of Blueprint Medicines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karuna Therapeutics and Blueprint Medicines.
Diversification Opportunities for Karuna Therapeutics and Blueprint Medicines
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Karuna and Blueprint is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Karuna 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 Karuna 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 Karuna 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 Karuna Therapeutics i.e., Karuna Therapeutics and Blueprint Medicines go up and down completely randomly.
Pair Corralation between Karuna Therapeutics and Blueprint Medicines
Given the investment horizon of 90 days Karuna Therapeutics is expected to under-perform the Blueprint Medicines. But the stock apears to be less risky and, when comparing its historical volatility, Karuna Therapeutics is 2.03 times less risky than Blueprint Medicines. The stock trades about -0.09 of its potential returns per unit of risk. The Blueprint Medicines Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,623 in Blueprint Medicines Corp on August 27, 2024 and sell it today you would earn a total of 3,792 from holding Blueprint Medicines Corp or generate 67.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 13.99% |
| Values | Daily Returns |
Karuna Therapeutics vs. Blueprint Medicines Corp
Performance |
| Timeline |
| Karuna Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Blueprint Medicines Corp |
Karuna Therapeutics and Blueprint Medicines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karuna Therapeutics and Blueprint Medicines
The main advantage of trading using opposite Karuna Therapeutics and Blueprint Medicines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karuna 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.| Karuna Therapeutics vs. Blueprint Medicines Corp | Karuna Therapeutics vs. Amylyx Pharmaceuticals | Karuna Therapeutics vs. Day One Biopharmaceuticals | Karuna Therapeutics vs. X4 Pharmaceuticals |
| Blueprint Medicines vs. Terns Pharmaceuticals | Blueprint Medicines vs. Amylyx Pharmaceuticals | Blueprint Medicines vs. Acumen Pharmaceuticals | Blueprint Medicines vs. Inozyme Pharma |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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