Correlation Between Esperion Therapeutics and Flex
Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and Flex 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 Flex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esperion Therapeutics and Flex, you can compare the effects of market volatilities on Esperion Therapeutics and Flex 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 Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and Flex.
Diversification Opportunities for Esperion Therapeutics and Flex
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Esperion and Flex is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex 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 Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Flex go up and down completely randomly.
Pair Corralation between Esperion Therapeutics and Flex
Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 1.76 times more return on investment than Flex. However, Esperion Therapeutics is 1.76 times more volatile than Flex. It trades about 0.2 of its potential returns per unit of risk. Flex is currently generating about 0.19 per unit of risk. If you would invest 208.00 in Esperion Therapeutics on August 30, 2024 and sell it today you would earn a total of 46.00 from holding Esperion Therapeutics or generate 22.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esperion Therapeutics vs. Flex
Performance |
| Timeline |
| Esperion Therapeutics |
| Flex |
Esperion Therapeutics and Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esperion Therapeutics and Flex
The main advantage of trading using opposite Esperion Therapeutics and Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, Flex 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 Flex will offset losses from the drop in Flex's long position.| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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