Correlation Between Blueprint Medicines and Insmed

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

Diversification Opportunities for Blueprint Medicines and Insmed

0.05

Correlation Coefficient

Blueprint Medicines  Insmed

Significant diversification

The 3 months correlation between Blueprint and Insmed is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Blueprint Medicines Corp and Insmed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insmed Inc 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 Insmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insmed Inc has no effect on the direction of Blueprint Medicines i.e., Blueprint Medicines and Insmed go up and down completely randomly.

Pair Corralation between Blueprint Medicines and Insmed

Given the investment horizon of 90 days Blueprint Medicines Corp is expected to generate 0.89 times more return on investment than Insmed. However, Blueprint Medicines Corp is 1.12 times less risky than Insmed. It trades about 0.1 of its potential returns per unit of risk. Insmed Inc is currently generating about 0.01 per unit of risk. If you would invest  8,247  in Blueprint Medicines Corp on September 25, 2024 and sell it today you would earn a total of  784.00  from holding Blueprint Medicines Corp or generate 9.51% return on investment over 90 days.

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

Blueprint Medicines Corp  vs.  Insmed Inc

Blueprint Medicines Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blueprint Medicines Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Blueprint Medicines is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Insmed Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insmed Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Insmed is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Blueprint Medicines and Insmed

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

The idea behind Blueprint Medicines Corp and Insmed Inc 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.