Correlation Between Esperion Therapeutics and Catalent
Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and Catalent 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 Catalent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esperion Therapeutics and Catalent, you can compare the effects of market volatilities on Esperion Therapeutics and Catalent 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 Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and Catalent.
Diversification Opportunities for Esperion Therapeutics and Catalent
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Esperion and Catalent is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent 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 Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Catalent go up and down completely randomly.
Pair Corralation between Esperion Therapeutics and Catalent
Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 6.13 times more return on investment than Catalent. However, Esperion Therapeutics is 6.13 times more volatile than Catalent. It trades about 0.2 of its potential returns per unit of risk. Catalent is currently generating about 0.24 per unit of risk. If you would invest 213.00 in Esperion Therapeutics on August 28, 2024 and sell it today you would earn a total of 44.00 from holding Esperion Therapeutics or generate 20.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esperion Therapeutics vs. Catalent
Performance |
| Timeline |
| Esperion Therapeutics |
| Catalent |
Esperion Therapeutics and Catalent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esperion Therapeutics and Catalent
The main advantage of trading using opposite Esperion Therapeutics and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, Catalent 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 Catalent will offset losses from the drop in Catalent's long position.| Esperion Therapeutics vs. Eliem Therapeutics | Esperion Therapeutics vs. HCW Biologics | Esperion Therapeutics vs. Scpharmaceuticals | Esperion Therapeutics vs. Milestone Pharmaceuticals |
| Catalent vs. IQVIA Holdings | Catalent vs. West Pharmaceutical Services | Catalent vs. Charles River Laboratories | Catalent vs. Bio Rad Laboratories |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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