Correlation Between Esperion Therapeutics and Avantor
Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and Avantor 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 Esperion Therapeutics and Avantor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esperion Therapeutics and Avantor, you can compare the effects of market volatilities on Esperion Therapeutics and Avantor 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 Esperion Therapeutics with a short position of Avantor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and Avantor.
Diversification Opportunities for Esperion Therapeutics and Avantor
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Esperion and Avantor is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Avantor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantor and Esperion 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 Esperion Therapeutics are associated (or correlated) with Avantor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantor has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Avantor go up and down completely randomly.
Pair Corralation between Esperion Therapeutics and Avantor
Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 3.05 times more return on investment than Avantor. However, Esperion Therapeutics is 3.05 times more volatile than Avantor. It trades about 0.01 of its potential returns per unit of risk. Avantor is currently generating about 0.02 per unit of risk. If you would invest 636.00 in Esperion Therapeutics on September 12, 2024 and sell it today you would lose (332.00) from holding Esperion Therapeutics or give up 52.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esperion Therapeutics vs. Avantor
Performance |
| Timeline |
| Esperion Therapeutics |
| Avantor |
Esperion Therapeutics and Avantor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esperion Therapeutics and Avantor
The main advantage of trading using opposite Esperion Therapeutics and Avantor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, Avantor 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 Avantor will offset losses from the drop in Avantor's long position.| Esperion Therapeutics vs. Evoke Pharma | Esperion Therapeutics vs. Lantheus Holdings | Esperion Therapeutics vs. ANI Pharmaceuticals | Esperion Therapeutics vs. Ironwood Pharmaceuticals |
| Avantor vs. Ashland Global Holdings | Avantor vs. H B Fuller | Avantor vs. Element Solutions | Avantor vs. Balchem |
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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