Correlation Between Esperion Therapeutics and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and Playa Hotels 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 Playa Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esperion Therapeutics and Playa Hotels Resorts, you can compare the effects of market volatilities on Esperion Therapeutics and Playa Hotels 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 Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and Playa Hotels.
Diversification Opportunities for Esperion Therapeutics and Playa Hotels
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Esperion and Playa is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Playa Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playa Hotels Resorts 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 Playa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playa Hotels Resorts has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Playa Hotels go up and down completely randomly.
Pair Corralation between Esperion Therapeutics and Playa Hotels
Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 6.01 times more return on investment than Playa Hotels. However, Esperion Therapeutics is 6.01 times more volatile than Playa Hotels Resorts. It trades about 0.15 of its potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.04 per unit of risk. If you would invest 252.00 in Esperion Therapeutics on September 12, 2024 and sell it today you would earn a total of 52.00 from holding Esperion Therapeutics or generate 20.63% 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. Playa Hotels Resorts
Performance |
| Timeline |
| Esperion Therapeutics |
| Playa Hotels Resorts |
Esperion Therapeutics and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esperion Therapeutics and Playa Hotels
The main advantage of trading using opposite Esperion Therapeutics and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, Playa Hotels 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 Playa Hotels will offset losses from the drop in Playa Hotels' long position.| Esperion Therapeutics vs. Evoke Pharma | Esperion Therapeutics vs. Lantheus Holdings | Esperion Therapeutics vs. ANI Pharmaceuticals | Esperion Therapeutics vs. Ironwood Pharmaceuticals |
| Playa Hotels vs. Golden Entertainment | Playa Hotels vs. Red Rock Resorts | Playa Hotels vs. Century Casinos | Playa Hotels vs. Studio City International |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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