Correlation Between Esperion Therapeutics and Viemed Healthcare

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

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

Diversification Opportunities for Esperion Therapeutics and Viemed Healthcare

0.5

Correlation Coefficient

Esperion Therapeutics  Viemed Healthcare

Very weak diversification

The 3 months correlation between Esperion and Viemed is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Esperion Therapeutics and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare 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 Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of Esperion Therapeutics i.e., Esperion Therapeutics and Viemed Healthcare go up and down completely randomly.

Pair Corralation between Esperion Therapeutics and Viemed Healthcare

Given the investment horizon of 90 days Esperion Therapeutics is expected to generate 1.4 times less return on investment than Viemed Healthcare. In addition to that, Esperion Therapeutics is 2.21 times more volatile than Viemed Healthcare. It trades about 0.03 of its total potential returns per unit of risk. Viemed Healthcare is currently generating about 0.09 per unit of volatility. If you would invest  700.00  in Viemed Healthcare on September 12, 2024 and sell it today you would earn a total of  180.00  from holding Viemed Healthcare or generate 25.71% return on investment over 90 days.

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

Esperion Therapeutics  vs.  Viemed Healthcare

Esperion Therapeutics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Esperion Therapeutics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Esperion Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Viemed Healthcare

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Viemed Healthcare are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Viemed Healthcare exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Esperion Therapeutics and Viemed Healthcare

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

The idea behind Esperion Therapeutics and Viemed Healthcare 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.