Correlation Between Esperion Therapeutics and Plus Therapeutics

Can any of the company-specific risk be diversified away by investing in both Esperion Therapeutics and Plus 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 Plus 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 Plus Therapeutics, you can compare the effects of market volatilities on Esperion Therapeutics and Plus 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 Plus Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esperion Therapeutics and Plus Therapeutics.

Diversification Opportunities for Esperion Therapeutics and Plus Therapeutics

0.34

Correlation Coefficient

Esperion Therapeutics  Plus Therapeutics

Weak diversification

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

Pair Corralation between Esperion Therapeutics and Plus Therapeutics

Given the investment horizon of 90 days Esperion Therapeutics is expected to under-perform the Plus Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Esperion Therapeutics is 13.07 times less risky than Plus Therapeutics. The stock trades about -0.11 of its potential returns per unit of risk. The Plus Therapeutics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  107.00  in Plus Therapeutics on December 22, 2024 and sell it today you would earn a total of  11.00  from holding Plus Therapeutics or generate 10.28% return on investment over 90 days.

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

Esperion Therapeutics  vs.  Plus 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.

Plus Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plus Therapeutics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Plus Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Esperion Therapeutics and Plus Therapeutics

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

The idea behind Esperion Therapeutics and Plus 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.