Correlation Between Pfizer and Esperion Therapeutics
Can any of the company-specific risk be diversified away by investing in both Pfizer and Esperion Therapeutics 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 Pfizer and Esperion Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Esperion Therapeutics, you can compare the effects of market volatilities on Pfizer and Esperion Therapeutics 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 Pfizer with a short position of Esperion Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Esperion Therapeutics.
Diversification Opportunities for Pfizer and Esperion Therapeutics
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pfizer and Esperion is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Esperion Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esperion Therapeutics and Pfizer 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 Pfizer Inc are associated (or correlated) with Esperion Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esperion Therapeutics has no effect on the direction of Pfizer i.e., Pfizer and Esperion Therapeutics go up and down completely randomly.
Pair Corralation between Pfizer and Esperion Therapeutics
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Esperion Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 3.41 times less risky than Esperion Therapeutics. The stock trades about -0.04 of its potential returns per unit of risk. The Esperion Therapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 224.00 in Esperion Therapeutics on September 1, 2024 and sell it today you would earn a total of 56.00 from holding Esperion Therapeutics or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Esperion Therapeutics
Performance |
| Timeline |
| Pfizer Inc |
| Esperion Therapeutics |
Pfizer and Esperion Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Esperion Therapeutics
The main advantage of trading using opposite Pfizer and Esperion Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Esperion Therapeutics 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 Esperion Therapeutics will offset losses from the drop in Esperion Therapeutics' long position.| Pfizer vs. Crinetics Pharmaceuticals | Pfizer vs. Enanta Pharmaceuticals | Pfizer vs. Amicus Therapeutics | Pfizer vs. Connect Biopharma Holdings |
| Esperion Therapeutics vs. Tff Pharmaceuticals | Esperion Therapeutics vs. Eliem Therapeutics | Esperion Therapeutics vs. Inhibrx | Esperion Therapeutics vs. Enliven Therapeutics |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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