Correlation Between Esperion Therapeutics and Pfizer
Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and Pfizer 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 Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esperion Therapeutics and Pfizer Inc, you can compare the effects of market volatilities on Esperion Therapeutics and Pfizer 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 Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and Pfizer.
Diversification Opportunities for Esperion Therapeutics and Pfizer
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Esperion and Pfizer is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc 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 Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Pfizer go up and down completely randomly.
Pair Corralation between Esperion Therapeutics and Pfizer
Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 5.3 times more return on investment than Pfizer. However, Esperion Therapeutics is 5.3 times more volatile than Pfizer Inc. It trades about 0.12 of its potential returns per unit of risk. Pfizer Inc is currently generating about 0.19 per unit of risk. If you would invest 215.00 in Esperion Therapeutics on September 18, 2024 and sell it today you would earn a total of 31.00 from holding Esperion Therapeutics or generate 14.42% 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. Pfizer Inc
Performance |
| Timeline |
| Esperion Therapeutics |
| Pfizer Inc |
Esperion Therapeutics and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esperion Therapeutics and Pfizer
The main advantage of trading using opposite Esperion Therapeutics and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.The idea behind Esperion Therapeutics and Pfizer Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pfizer vs. Emergent Biosolutions | Pfizer vs. Neurocrine Biosciences | Pfizer vs. Teva Pharma Industries | Pfizer vs. Haleon plc |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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