Correlation Between Esperion Therapeutics and 4D Molecular

Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and 4D Molecular 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 4D Molecular into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Esperion Therapeutics and 4D Molecular Therapeutics, you can compare the effects of market volatilities on Esperion Therapeutics and 4D Molecular 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 4D Molecular. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and 4D Molecular.

Diversification Opportunities for Esperion Therapeutics and 4D Molecular

0.68

Correlation Coefficient

Esperion Therapeutics  4D Molecular

Poor diversification

The 3 months correlation between Esperion and FDMT is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and 4D Molecular Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4D Molecular 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 4D Molecular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4D Molecular Therapeutics has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and 4D Molecular go up and down completely randomly.

Pair Corralation between Esperion Therapeutics and 4D Molecular

Given the investment horizon of 90 days Esperion Therapeutics is expected to under-perform the 4D Molecular. But the stock apears to be less risky and, when comparing its historical volatility, Esperion Therapeutics is 1.42 times less risky than 4D Molecular. The stock trades about -0.14 of its potential returns per unit of risk. The 4D Molecular Therapeutics is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  530.00  in 4D Molecular Therapeutics on December 28, 2024 and sell it today you would lose (167.00) from holding 4D Molecular Therapeutics or give up 31.51% 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.  4D Molecular Therapeutics

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.

4D Molecular Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days 4D Molecular 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 primary indicators remain comparatively stable which may send shares a bit higher in April 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 4D Molecular

The main advantage of trading using opposite Esperion Therapeutics and 4D Molecular positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esperion Therapeutics position performs unexpectedly, 4D Molecular 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 4D Molecular will offset losses from the drop in 4D Molecular's long position.

The idea behind Esperion Therapeutics and 4D Molecular 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.