Correlation Between Esperion Therapeutics and Ironwood Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and Ironwood Pharmaceuticals 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 Ironwood Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esperion Therapeutics and Ironwood Pharmaceuticals, you can compare the effects of market volatilities on Esperion Therapeutics and Ironwood Pharmaceuticals 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 Ironwood Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and Ironwood Pharmaceuticals.
Diversification Opportunities for Esperion Therapeutics and Ironwood Pharmaceuticals
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Esperion and Ironwood is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Ironwood Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ironwood Pharmaceuticals 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 Ironwood Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ironwood Pharmaceuticals has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Ironwood Pharmaceuticals go up and down completely randomly.
Pair Corralation between Esperion Therapeutics and Ironwood Pharmaceuticals
Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 1.57 times more return on investment than Ironwood Pharmaceuticals. However, Esperion Therapeutics is 1.57 times more volatile than Ironwood Pharmaceuticals. It trades about 0.0 of its potential returns per unit of risk. Ironwood Pharmaceuticals is currently generating about -0.05 per unit of risk. If you would invest 630.00 in Esperion Therapeutics on August 28, 2024 and sell it today you would lose (373.00) from holding Esperion Therapeutics or give up 59.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esperion Therapeutics vs. Ironwood Pharmaceuticals
Performance |
| Timeline |
| Esperion Therapeutics |
| Ironwood Pharmaceuticals |
Esperion Therapeutics and Ironwood Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esperion Therapeutics and Ironwood Pharmaceuticals
The main advantage of trading using opposite Esperion Therapeutics and Ironwood Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, Ironwood Pharmaceuticals 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 Ironwood Pharmaceuticals will offset losses from the drop in Ironwood Pharmaceuticals' long position.| Esperion Therapeutics vs. Elanco Animal Health | Esperion Therapeutics vs. SIGA Technologies | Esperion Therapeutics vs. Catalent | Esperion Therapeutics vs. ANI Pharmaceuticals |
| Ironwood Pharmaceuticals vs. Neurocrine Biosciences | Ironwood Pharmaceuticals vs. Amphastar P | Ironwood Pharmaceuticals vs. Collegium Pharmaceutical | Ironwood Pharmaceuticals 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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