Correlation Between ASML Holding and Vishay Intertechnology

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

Diversification Opportunities for ASML Holding and Vishay Intertechnology

0.46

Correlation Coefficient

ASML Holding  Vishay Intertechnology

Very weak diversification

The 3 months correlation between ASML and Vishay is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology 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 Vishay Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of ASML Holding i.e., ASML Holding and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between ASML Holding and Vishay Intertechnology

Given the investment horizon of 90 days ASML Holding NV is expected to under-perform the Vishay Intertechnology. In addition to that, ASML Holding is 1.39 times more volatile than Vishay Intertechnology. It trades about -0.17 of its total potential returns per unit of risk. Vishay Intertechnology is currently generating about 0.04 per unit of volatility. If you would invest  2,198  in Vishay Intertechnology on February 2, 2024 and sell it today you would earn a total of  25.00  from holding Vishay Intertechnology or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

ASML Holding NV  vs.  Vishay Intertechnology

ASML Holding NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASML Holding NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, ASML Holding is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Vishay Intertechnology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Intertechnology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ASML Holding and Vishay Intertechnology

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

The idea behind ASML Holding NV and Vishay Intertechnology 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.