Correlation Between Esperion Therapeutics and STATE

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Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and STATE 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 STATE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esperion Therapeutics and STATE STREET P, you can compare the effects of market volatilities on Esperion Therapeutics and STATE 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 STATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and STATE.

Diversification Opportunities for Esperion Therapeutics and STATE

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Esperion and STATE is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and STATE STREET P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STATE STREET P 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 STATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STATE STREET P has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and STATE go up and down completely randomly.

Pair Corralation between Esperion Therapeutics and STATE

Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 4.69 times more return on investment than STATE. However, Esperion Therapeutics is 4.69 times more volatile than STATE STREET P. It trades about 0.29 of its potential returns per unit of risk. STATE STREET P is currently generating about -0.11 per unit of risk. If you would invest  252.00  in Esperion Therapeutics on September 10, 2024 and sell it today you would earn a total of  96.00  from holding Esperion Therapeutics or generate 38.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Esperion Therapeutics  vs.  STATE STREET P

 Performance 
       Timeline  
Esperion Therapeutics 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Esperion Therapeutics are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Esperion Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.
STATE STREET P 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STATE STREET P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, STATE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Esperion Therapeutics and STATE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Esperion Therapeutics and STATE

The main advantage of trading using opposite Esperion Therapeutics and STATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, STATE 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 STATE will offset losses from the drop in STATE's long position.
The idea behind Esperion Therapeutics and STATE STREET P 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.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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