Correlation Between Elanco Animal and Esperion Therapeutics
Can any of the company-specific risk be diversified away by investing in both Elanco Animal 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 Elanco Animal and Esperion Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elanco Animal Health and Esperion Therapeutics, you can compare the effects of market volatilities on Elanco Animal 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 Elanco Animal with a short position of Esperion Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elanco Animal and Esperion Therapeutics.
Diversification Opportunities for Elanco Animal and Esperion Therapeutics
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elanco and Esperion is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Elanco Animal Health and Esperion Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esperion Therapeutics and Elanco Animal 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 Elanco Animal Health 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 Elanco Animal i.e., Elanco Animal and Esperion Therapeutics go up and down completely randomly.
Pair Corralation between Elanco Animal and Esperion Therapeutics
Given the investment horizon of 90 days Elanco Animal is expected to generate 124.88 times less return on investment than Esperion Therapeutics. But when comparing it to its historical volatility, Elanco Animal Health is 1.61 times less risky than Esperion Therapeutics. It trades about 0.0 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elanco Animal Health vs. Esperion Therapeutics
Performance |
| Timeline |
| Elanco Animal Health |
| Esperion Therapeutics |
Elanco Animal and Esperion Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elanco Animal and Esperion Therapeutics
The main advantage of trading using opposite Elanco Animal and Esperion Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elanco Animal 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.| Elanco Animal vs. Capricor Therapeutics | Elanco Animal vs. Soleno Therapeutics | Elanco Animal vs. Bio Path Holdings | Elanco Animal vs. Moleculin Biotech |
| 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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