Correlation Between Esperion Therapeutics and Align Technology

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

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

Diversification Opportunities for Esperion Therapeutics and Align Technology

0.79

Correlation Coefficient

Esperion Therapeutics  Align Technology

Poor diversification

The 3 months correlation between Esperion and Align is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology 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 Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Align Technology go up and down completely randomly.

Pair Corralation between Esperion Therapeutics and Align Technology

Given the investment horizon of 90 days Esperion Therapeutics is expected to under-perform the Align Technology. In addition to that, Esperion Therapeutics is 1.69 times more volatile than Align Technology. It trades about -0.12 of its total potential returns per unit of risk. Align Technology is currently generating about -0.17 per unit of volatility. If you would invest  20,658  in Align Technology on December 29, 2024 and sell it today you would lose (4,229) from holding Align Technology or give up 20.47% of portfolio value over 90 days.

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

Esperion Therapeutics  vs.  Align Technology

Esperion Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esperion Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Align Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Align Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Esperion Therapeutics and Align Technology

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

The idea behind Esperion Therapeutics and Align Technology 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.