Correlation Between Cingulate Warrants and Esperion Therapeutics

Can any of the company-specific risk be diversified away by investing in both Cingulate Warrants 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 Cingulate Warrants and Esperion Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cingulate Warrants and Esperion Therapeutics, you can compare the effects of market volatilities on Cingulate Warrants 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 Cingulate Warrants with a short position of Esperion Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cingulate Warrants and Esperion Therapeutics.

Diversification Opportunities for Cingulate Warrants and Esperion Therapeutics

-0.6

Correlation Coefficient

Cingulate Warrants  Esperion Therapeutics

Excellent diversification

The 3 months correlation between Cingulate and Esperion is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cingulate Warrants and Esperion Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esperion Therapeutics and Cingulate Warrants 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 Cingulate Warrants 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 Cingulate Warrants i.e., Cingulate Warrants and Esperion Therapeutics go up and down completely randomly.

Pair Corralation between Cingulate Warrants and Esperion Therapeutics

Assuming the 90 days horizon Cingulate Warrants is expected to generate 3.89 times more return on investment than Esperion Therapeutics. However, Cingulate Warrants is 3.89 times more volatile than Esperion Therapeutics. It trades about 0.14 of its potential returns per unit of risk. Esperion Therapeutics is currently generating about 0.44 per unit of risk. If you would invest  4.16  in Cingulate Warrants on September 4, 2024 and sell it today you would earn a total of  0.69  from holding Cingulate Warrants or generate 16.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Cingulate Warrants  vs.  Esperion Therapeutics

Cingulate Warrants

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cingulate Warrants are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Cingulate Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Esperion Therapeutics

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Esperion Therapeutics are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Esperion Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cingulate Warrants and Esperion Therapeutics

The main advantage of trading using opposite Cingulate Warrants and Esperion Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cingulate Warrants 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.

The idea behind Cingulate Warrants and Esperion Therapeutics 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.