Correlation Between Esperion Therapeutics and SkyWest
Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and SkyWest 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 SkyWest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esperion Therapeutics and SkyWest, you can compare the effects of market volatilities on Esperion Therapeutics and SkyWest 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 SkyWest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and SkyWest.
Diversification Opportunities for Esperion Therapeutics and SkyWest
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Esperion and SkyWest is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and SkyWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyWest 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 SkyWest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkyWest has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and SkyWest go up and down completely randomly.
Pair Corralation between Esperion Therapeutics and SkyWest
Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 2.06 times more return on investment than SkyWest. However, Esperion Therapeutics is 2.06 times more volatile than SkyWest. It trades about 0.31 of its potential returns per unit of risk. SkyWest is currently generating about 0.35 per unit of risk. If you would invest 204.00 in Esperion Therapeutics on September 1, 2024 and sell it today you would earn a total of 76.00 from holding Esperion Therapeutics or generate 37.25% 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. SkyWest
Performance |
| Timeline |
| Esperion Therapeutics |
| SkyWest |
Esperion Therapeutics and SkyWest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esperion Therapeutics and SkyWest
The main advantage of trading using opposite Esperion Therapeutics and SkyWest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, SkyWest 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 SkyWest will offset losses from the drop in SkyWest's long position.| Esperion Therapeutics vs. Tff Pharmaceuticals | Esperion Therapeutics vs. Eliem Therapeutics | Esperion Therapeutics vs. Inhibrx | Esperion Therapeutics vs. Enliven Therapeutics |
| SkyWest vs. Canadian Pacific Railway | SkyWest vs. Volaris | SkyWest vs. Werner Enterprises | SkyWest vs. Canadian National Railway |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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