Correlation Between ASML Holding and Enphase Energy
Can any of the company-specific risk be diversified away by investing in both ASML Holding and Enphase Energy 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 ASML Holding and Enphase Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASML Holding NV and Enphase Energy, you can compare the effects of market volatilities on ASML Holding and Enphase Energy 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 ASML Holding with a short position of Enphase Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Enphase Energy.
Diversification Opportunities for ASML Holding and Enphase Energy
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASML and Enphase is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Enphase Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enphase Energy and ASML Holding 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 ASML Holding NV are associated (or correlated) with Enphase Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enphase Energy has no effect on the direction of ASML Holding i.e., ASML Holding and Enphase Energy go up and down completely randomly.
Pair Corralation between ASML Holding and Enphase Energy
Given the investment horizon of 90 days ASML Holding NV is expected to generate 0.56 times more return on investment than Enphase Energy. However, ASML Holding NV is 1.79 times less risky than Enphase Energy. It trades about 0.08 of its potential returns per unit of risk. Enphase Energy is currently generating about -0.03 per unit of risk. If you would invest 63,168 in ASML Holding NV on January 26, 2024 and sell it today you would earn a total of 26,064 from holding ASML Holding NV or generate 41.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASML Holding NV vs. Enphase Energy
Performance |
| Timeline |
| ASML Holding NV |
| Enphase Energy |
ASML Holding and Enphase Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML Holding and Enphase Energy
The main advantage of trading using opposite ASML Holding and Enphase Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Enphase Energy 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 Enphase Energy will offset losses from the drop in Enphase Energy's long position.| ASML Holding vs. KLA Tencor | ASML Holding vs. Teradyne | ASML Holding vs. Applied Materials | ASML Holding vs. Aehr Test Systems |
| Enphase Energy vs. Sunnova Energy International | Enphase Energy vs. Nextracker Class A | Enphase Energy vs. Sunrun Inc |
Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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