Correlation Between Esperion Therapeutics and Vericel Corp

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

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

Diversification Opportunities for Esperion Therapeutics and Vericel Corp

0.77

Correlation Coefficient

Esperion Therapeutics  Vericel Corp

Poor diversification

The 3 months correlation between Esperion and Vericel is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Vericel Corp Ord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vericel Corp Ord 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 Vericel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vericel Corp Ord has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Vericel Corp go up and down completely randomly.

Pair Corralation between Esperion Therapeutics and Vericel Corp

Given the investment horizon of 90 days Esperion Therapeutics is expected to under-perform the Vericel Corp. In addition to that, Esperion Therapeutics is 1.43 times more volatile than Vericel Corp Ord. It trades about -0.14 of its total potential returns per unit of risk. Vericel Corp Ord is currently generating about -0.13 per unit of volatility. If you would invest  5,530  in Vericel Corp Ord on December 29, 2024 and sell it today you would lose (1,080) from holding Vericel Corp Ord or give up 19.53% 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.  Vericel Corp Ord

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.

Vericel Corp Ord

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vericel Corp Ord has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Esperion Therapeutics and Vericel Corp

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

The idea behind Esperion Therapeutics and Vericel Corp Ord 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.