Correlation Between ASML Holding and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both ASML Holding and Vanguard Emerging 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 Vanguard Emerging 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 Vanguard Emerging Markets, you can compare the effects of market volatilities on ASML Holding and Vanguard Emerging 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 Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Vanguard Emerging.
Diversification Opportunities for ASML Holding and Vanguard Emerging
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ASML and Vanguard is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Emerging Markets 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 Vanguard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of ASML Holding i.e., ASML Holding and Vanguard Emerging go up and down completely randomly.
Pair Corralation between ASML Holding and Vanguard Emerging
Assuming the 90 days trading horizon ASML Holding NV is expected to under-perform the Vanguard Emerging. In addition to that, ASML Holding is 3.74 times more volatile than Vanguard Emerging Markets. It trades about -0.08 of its total potential returns per unit of risk. Vanguard Emerging Markets is currently generating about -0.17 per unit of volatility. If you would invest 3,479 in Vanguard Emerging Markets on January 20, 2024 and sell it today you would lose (75.00) from holding Vanguard Emerging Markets or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
ASML Holding NV vs. Vanguard Emerging Markets
Performance |
| Timeline |
| ASML Holding NV |
| Vanguard Emerging Markets |
ASML Holding and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML Holding and Vanguard Emerging
The main advantage of trading using opposite ASML Holding and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Vanguard Emerging 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 Vanguard Emerging will offset losses from the drop in Vanguard Emerging's long position.| ASML Holding vs. Prosus NV | ASML Holding vs. Just Eat Takeaway | ASML Holding vs. Koninklijke Ahold Delhaize | ASML Holding vs. ASM International NV |
| Vanguard Emerging vs. Vanguard Materials Index | Vanguard Emerging vs. Vanguard Limited Term Tax Exempt | Vanguard Emerging vs. Vanguard Limited Term Tax Exempt | Vanguard Emerging vs. Vanguard Global Minimum |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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