Correlation Between Eagle Pharmaceuticals and Evolus

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

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

Diversification Opportunities for Eagle Pharmaceuticals and Evolus

0.34

Correlation Coefficient

Eagle Pharmaceuticals  Evolus

Weak diversification

The 3 months correlation between Eagle and Evolus is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Pharmaceuticals and Evolus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolus Inc and Eagle Pharmaceuticals 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 Eagle Pharmaceuticals are associated (or correlated) with Evolus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolus Inc has no effect on the direction of Eagle Pharmaceuticals i.e., Eagle Pharmaceuticals and Evolus go up and down completely randomly.

Pair Corralation between Eagle Pharmaceuticals and Evolus

Given the investment horizon of 90 days Eagle Pharmaceuticals is expected to under-perform the Evolus. In addition to that, Eagle Pharmaceuticals is 2.57 times more volatile than Evolus Inc. It trades about -0.33 of its total potential returns per unit of risk. Evolus Inc is currently generating about -0.04 per unit of volatility. If you would invest  1,558  in Evolus Inc on September 3, 2024 and sell it today you would lose (189.00) from holding Evolus Inc or give up 12.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	37.5%
Values	Daily Returns

Eagle Pharmaceuticals  vs.  Evolus Inc

Eagle Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Evolus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Eagle Pharmaceuticals and Evolus

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

The idea behind Eagle Pharmaceuticals and Evolus Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.