Correlation Between Bausch Health and Esperion Therapeutics
Can any of the company-specific risk be diversified away by investing in both Bausch Health and Esperion Therapeutics 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 Bausch Health and Esperion Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bausch Health Companies and Esperion Therapeutics, you can compare the effects of market volatilities on Bausch Health and Esperion Therapeutics 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 Bausch Health with a short position of Esperion Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Esperion Therapeutics.
Diversification Opportunities for Bausch Health and Esperion Therapeutics
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bausch and Esperion is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Esperion Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esperion Therapeutics and Bausch Health 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 Bausch Health Companies are associated (or correlated) with Esperion Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esperion Therapeutics has no effect on the direction of Bausch Health i.e., Bausch Health and Esperion Therapeutics go up and down completely randomly.
Pair Corralation between Bausch Health and Esperion Therapeutics
Considering the 90-day investment horizon Bausch Health Companies is expected to under-perform the Esperion Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Bausch Health Companies is 2.33 times less risky than Esperion Therapeutics. The stock trades about -0.31 of its potential returns per unit of risk. The Esperion Therapeutics is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 203.00 in Esperion Therapeutics on September 2, 2024 and sell it today you would earn a total of 77.00 from holding Esperion Therapeutics or generate 37.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Esperion Therapeutics
Performance |
| Timeline |
| Bausch Health Companies |
| Esperion Therapeutics |
Bausch Health and Esperion Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Esperion Therapeutics
The main advantage of trading using opposite Bausch Health and Esperion Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health position performs unexpectedly, Esperion Therapeutics 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 Esperion Therapeutics will offset losses from the drop in Esperion Therapeutics' long position.| Bausch Health vs. Crinetics Pharmaceuticals | Bausch Health vs. Enanta Pharmaceuticals | Bausch Health vs. Amicus Therapeutics | Bausch Health vs. Connect Biopharma Holdings |
| Esperion Therapeutics vs. Elanco Animal Health | Esperion Therapeutics vs. SIGA Technologies | Esperion Therapeutics vs. Catalent | Esperion Therapeutics vs. ANI 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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