Correlation Between Esperion Therapeutics and Terns Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and Terns Pharmaceuticals 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 Terns Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esperion Therapeutics and Terns Pharmaceuticals, you can compare the effects of market volatilities on Esperion Therapeutics and Terns Pharmaceuticals 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 Terns Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and Terns Pharmaceuticals.
Diversification Opportunities for Esperion Therapeutics and Terns Pharmaceuticals
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Esperion and Terns is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Terns Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terns Pharmaceuticals 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 Terns Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terns Pharmaceuticals has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Terns Pharmaceuticals go up and down completely randomly.
Pair Corralation between Esperion Therapeutics and Terns Pharmaceuticals
Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 1.7 times more return on investment than Terns Pharmaceuticals. However, Esperion Therapeutics is 1.7 times more volatile than Terns Pharmaceuticals. It trades about 0.06 of its potential returns per unit of risk. Terns Pharmaceuticals is currently generating about -0.05 per unit of risk. If you would invest 243.00 in Esperion Therapeutics on September 13, 2024 and sell it today you would earn a total of 7.50 from holding Esperion Therapeutics or generate 3.09% 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. Terns Pharmaceuticals
Performance |
| Timeline |
| Esperion Therapeutics |
| Terns Pharmaceuticals |
Esperion Therapeutics and Terns Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esperion Therapeutics and Terns Pharmaceuticals
The main advantage of trading using opposite Esperion Therapeutics and Terns Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, Terns Pharmaceuticals 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 Terns Pharmaceuticals will offset losses from the drop in Terns Pharmaceuticals' long position.| Esperion Therapeutics vs. Elanco Animal Health | Esperion Therapeutics vs. SIGA Technologies | Esperion Therapeutics vs. Catalent | Esperion Therapeutics vs. ANI Pharmaceuticals |
| Terns Pharmaceuticals vs. Emergent Biosolutions | Terns Pharmaceuticals vs. Bausch Health Companies | Terns Pharmaceuticals vs. Neurocrine Biosciences | Terns Pharmaceuticals vs. Teva Pharma Industries |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Global Correlations Find global opportunities by holding instruments from different markets |