Correlation Between ASML Holding and Universal
Can any of the company-specific risk be diversified away by investing in both ASML Holding and Universal 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 Universal 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 Universal, you can compare the effects of market volatilities on ASML Holding and Universal 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 Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Universal.
Diversification Opportunities for ASML Holding and Universal
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ASML and Universal is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of ASML Holding i.e., ASML Holding and Universal go up and down completely randomly.
Pair Corralation between ASML Holding and Universal
Given the investment horizon of 90 days ASML Holding is expected to generate 1.91 times less return on investment than Universal. In addition to that, ASML Holding is 1.99 times more volatile than Universal. It trades about 0.07 of its total potential returns per unit of risk. Universal is currently generating about 0.26 per unit of volatility. If you would invest 4,833 in Universal on December 29, 2023 and sell it today you would earn a total of 339.00 from holding Universal or generate 7.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ASML Holding NV vs. Universal
Performance |
Timeline |
ASML Holding NV |
Universal |
ASML Holding and Universal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ASML Holding and Universal
The main advantage of trading using opposite ASML Holding and Universal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Universal 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 Universal will offset losses from the drop in Universal's long position.ASML Holding vs. JD Sports Fashion | ASML Holding vs. Mattel Inc | ASML Holding vs. Twin Vee Powercats | ASML Holding vs. Brunswick |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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