Correlation Between Esperion Therapeutics and Legend Biotech
Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and Legend Biotech 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 Legend Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esperion Therapeutics and Legend Biotech Corp, you can compare the effects of market volatilities on Esperion Therapeutics and Legend Biotech 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 Legend Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and Legend Biotech.
Diversification Opportunities for Esperion Therapeutics and Legend Biotech
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Esperion and Legend is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Legend Biotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legend Biotech Corp 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 Legend Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legend Biotech Corp has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Legend Biotech go up and down completely randomly.
Pair Corralation between Esperion Therapeutics and Legend Biotech
Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 1.45 times more return on investment than Legend Biotech. However, Esperion Therapeutics is 1.45 times more volatile than Legend Biotech Corp. It trades about 0.16 of its potential returns per unit of risk. Legend Biotech Corp is currently generating about -0.13 per unit of risk. If you would invest 183.00 in Esperion Therapeutics on September 2, 2024 and sell it today you would earn a total of 97.00 from holding Esperion Therapeutics or generate 53.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esperion Therapeutics vs. Legend Biotech Corp
Performance |
| Timeline |
| Esperion Therapeutics |
| Legend Biotech Corp |
Esperion Therapeutics and Legend Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esperion Therapeutics and Legend Biotech
The main advantage of trading using opposite Esperion Therapeutics and Legend Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, Legend Biotech 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 Legend Biotech will offset losses from the drop in Legend Biotech's long position.| Esperion Therapeutics vs. Elanco Animal Health | Esperion Therapeutics vs. SIGA Technologies | Esperion Therapeutics vs. Catalent | Esperion Therapeutics vs. ANI Pharmaceuticals |
| Legend Biotech vs. Vaxcyte | Legend Biotech vs. Apellis Pharmaceuticals | Legend Biotech vs. Travere Therapeutics | Legend Biotech vs. Akero Therapeutics |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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