Correlation Between Esperion Therapeutics and Assertio Therapeutics

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

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

Diversification Opportunities for Esperion Therapeutics and Assertio Therapeutics

-0.44

Correlation Coefficient

Esperion Therapeutics  Assertio Therapeutics

Very good diversification

The 3 months correlation between Esperion and Assertio is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Assertio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assertio Therapeutics 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 Assertio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assertio Therapeutics has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Assertio Therapeutics go up and down completely randomly.

Pair Corralation between Esperion Therapeutics and Assertio Therapeutics

Given the investment horizon of 90 days Esperion Therapeutics is expected to under-perform the Assertio Therapeutics. In addition to that, Esperion Therapeutics is 2.68 times more volatile than Assertio Therapeutics. It trades about -0.14 of its total potential returns per unit of risk. Assertio Therapeutics is currently generating about -0.26 per unit of volatility. If you would invest  102.00  in Assertio Therapeutics on October 1, 2024 and sell it today you would lose (16.25) from holding Assertio Therapeutics or give up 15.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Esperion Therapeutics  vs.  Assertio Therapeutics

Esperion Therapeutics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Esperion Therapeutics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Esperion Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Assertio Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assertio Therapeutics 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Esperion Therapeutics and Assertio Therapeutics

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

The idea behind Esperion Therapeutics and Assertio 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .