Correlation Between Esperion Therapeutics and NorthWestern
Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and NorthWestern 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 NorthWestern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esperion Therapeutics and NorthWestern, you can compare the effects of market volatilities on Esperion Therapeutics and NorthWestern 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 NorthWestern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and NorthWestern.
Diversification Opportunities for Esperion Therapeutics and NorthWestern
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Esperion and NorthWestern is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and NorthWestern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthWestern 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 NorthWestern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthWestern has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and NorthWestern go up and down completely randomly.
Pair Corralation between Esperion Therapeutics and NorthWestern
Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 3.89 times more return on investment than NorthWestern. However, Esperion Therapeutics is 3.89 times more volatile than NorthWestern. It trades about 0.16 of its potential returns per unit of risk. NorthWestern is currently generating about 0.05 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esperion Therapeutics vs. NorthWestern
Performance |
| Timeline |
| Esperion Therapeutics |
| NorthWestern |
Esperion Therapeutics and NorthWestern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esperion Therapeutics and NorthWestern
The main advantage of trading using opposite Esperion Therapeutics and NorthWestern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, NorthWestern 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 NorthWestern will offset losses from the drop in NorthWestern's long position.| Esperion Therapeutics vs. Elanco Animal Health | Esperion Therapeutics vs. SIGA Technologies | Esperion Therapeutics vs. Catalent | Esperion Therapeutics vs. ANI Pharmaceuticals |
| NorthWestern vs. Allete Inc | NorthWestern vs. Black Hills | NorthWestern vs. Otter Tail | NorthWestern vs. Avista |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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