Correlation Between Esperion Therapeutics and I Mab

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

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

Diversification Opportunities for Esperion Therapeutics and I Mab

-0.34

Correlation Coefficient

Esperion Therapeutics  I Mab

Very good diversification

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

Pair Corralation between Esperion Therapeutics and I Mab

Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 1.22 times more return on investment than I Mab. However, Esperion Therapeutics is 1.22 times more volatile than I Mab. It trades about 0.0 of its potential returns per unit of risk. I Mab is currently generating about -0.03 per unit of risk. If you would invest  607.00  in Esperion Therapeutics on September 13, 2024 and sell it today you would lose (352.00) from holding Esperion Therapeutics or give up 57.99% of portfolio value over 90 days.

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

Esperion Therapeutics  vs.  I Mab

Esperion Therapeutics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Esperion Therapeutics are ranked lower than 8 (%) 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.

I Mab

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days I Mab has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, I Mab is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Esperion Therapeutics and I Mab

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

The idea behind Esperion Therapeutics and I Mab 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.