Correlation Between Esperion Therapeutics and Vericel Corp

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

By analyzing existing cross correlation between Esperion Therapeutics and Vericel Corp Ord, you can compare the effects of market volatilities on Esperion Therapeutics and Vericel Corp 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 Vericel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and Vericel Corp.

Diversification Opportunities for Esperion Therapeutics and Vericel Corp

0.7

Correlation Coefficient

Esperion Therapeutics  Vericel Corp

Poor diversification

The 3 months correlation between Esperion and Vericel is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Vericel Corp Ord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vericel Corp Ord 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 Vericel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vericel Corp Ord has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Vericel Corp go up and down completely randomly.

Pair Corralation between Esperion Therapeutics and Vericel Corp

Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 1.64 times more return on investment than Vericel Corp. However, Esperion Therapeutics is 1.64 times more volatile than Vericel Corp Ord. It trades about 0.16 of its potential returns per unit of risk. Vericel Corp Ord is currently generating about 0.11 per unit of risk. If you would invest  183.00  in Esperion Therapeutics on September 1, 2024 and sell it today you would earn a total of  97.00  from holding Esperion Therapeutics or generate 53.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Esperion Therapeutics  vs.  Vericel Corp Ord

Esperion Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Esperion Therapeutics are ranked lower than 12 (%) 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.

Vericel Corp Ord

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vericel Corp Ord are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Vericel Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Esperion Therapeutics and Vericel Corp

The main advantage of trading using opposite Esperion Therapeutics and Vericel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, Vericel Corp 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 Vericel Corp will offset losses from the drop in Vericel Corp's long position.

The idea behind Esperion Therapeutics and Vericel Corp Ord 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.