Correlation Between Lindblad Expeditions and Esperion Therapeutics

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

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

Diversification Opportunities for Lindblad Expeditions and Esperion Therapeutics

0.73

Correlation Coefficient

Lindblad Expeditions  Esperion Therapeutics

Poor diversification

The 3 months correlation between Lindblad and Esperion is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lindblad Expeditions Holdings and Esperion Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esperion Therapeutics and Lindblad Expeditions 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 Lindblad Expeditions Holdings 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 Lindblad Expeditions i.e., Lindblad Expeditions and Esperion Therapeutics go up and down completely randomly.

Pair Corralation between Lindblad Expeditions and Esperion Therapeutics

Given the investment horizon of 90 days Lindblad Expeditions is expected to generate 1.63 times less return on investment than Esperion Therapeutics. But when comparing it to its historical volatility, Lindblad Expeditions Holdings is 1.11 times less risky than Esperion Therapeutics. It trades about 0.16 of its potential returns per unit of risk. Esperion Therapeutics is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  172.00  in Esperion Therapeutics on September 5, 2024 and sell it today you would earn a total of  153.00  from holding Esperion Therapeutics or generate 88.95% return on investment over 90 days.

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

Lindblad Expeditions Holdings  vs.  Esperion Therapeutics

Lindblad Expeditions

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Lindblad Expeditions exhibited solid returns over the last few months and may actually be approaching a breakup point.

Esperion Therapeutics

Risk-Adjusted Performance

18 of 100

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 conflicting basic indicators, Esperion Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lindblad Expeditions and Esperion Therapeutics

The main advantage of trading using opposite Lindblad Expeditions and Esperion Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindblad Expeditions 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 Lindblad Expeditions Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.