Correlation Between Teradyne and ASML Holding
Can any of the company-specific risk be diversified away by investing in both Teradyne and ASML Holding 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 Teradyne and ASML Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and ASML Holding NV, you can compare the effects of market volatilities on Teradyne and ASML Holding 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 Teradyne with a short position of ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and ASML Holding.
Diversification Opportunities for Teradyne and ASML Holding
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Teradyne and ASML is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and ASML Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML Holding NV and Teradyne 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 Teradyne are associated (or correlated) with ASML Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML Holding NV has no effect on the direction of Teradyne i.e., Teradyne and ASML Holding go up and down completely randomly.
Pair Corralation between Teradyne and ASML Holding
Considering the 90-day investment horizon Teradyne is expected to generate 6.99 times less return on investment than ASML Holding. But when comparing it to its historical volatility, Teradyne is 1.06 times less risky than ASML Holding. It trades about 0.01 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 54,309 in ASML Holding NV on January 26, 2024 and sell it today you would earn a total of 34,923 from holding ASML Holding NV or generate 64.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. ASML Holding NV
Performance |
| Timeline |
| Teradyne |
| ASML Holding NV |
Teradyne and ASML Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and ASML Holding
The main advantage of trading using opposite Teradyne and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, ASML Holding 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 ASML Holding will offset losses from the drop in ASML Holding's long position.The idea behind Teradyne and ASML Holding NV 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.| ASML Holding vs. Sunrun Inc | ASML Holding vs. Sunnova Energy International | ASML Holding vs. JinkoSolar Holding |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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