Correlation Between Catalent and Esperion Therapeutics
Can any of the company-specific risk be diversified away by investing in both Catalent 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 Catalent and Esperion Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalent and Esperion Therapeutics, you can compare the effects of market volatilities on Catalent 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 Catalent with a short position of Esperion Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and Esperion Therapeutics.
Diversification Opportunities for Catalent and Esperion Therapeutics
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Catalent and Esperion is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Esperion Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esperion Therapeutics and Catalent 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 Catalent 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 Catalent i.e., Catalent and Esperion Therapeutics go up and down completely randomly.
Pair Corralation between Catalent and Esperion Therapeutics
Given the investment horizon of 90 days Catalent is expected to generate 2.45 times less return on investment than Esperion Therapeutics. But when comparing it to its historical volatility, Catalent is 5.12 times less risky than Esperion Therapeutics. It trades about 0.09 of its potential returns per unit of risk. Esperion Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 214.00 in Esperion Therapeutics on August 28, 2024 and sell it today you would earn a total of 43.00 from holding Esperion Therapeutics or generate 20.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalent vs. Esperion Therapeutics
Performance |
| Timeline |
| Catalent |
| Esperion Therapeutics |
Catalent and Esperion Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalent and Esperion Therapeutics
The main advantage of trading using opposite Catalent and Esperion Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent 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.| Catalent vs. IQVIA Holdings | Catalent vs. West Pharmaceutical Services | Catalent vs. Charles River Laboratories | Catalent vs. Bio Rad Laboratories |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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