Correlation Between ASML Holding and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both ASML Holding and Canadian Utilities 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 Canadian Utilities 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 Canadian Utilities Limited, you can compare the effects of market volatilities on ASML Holding and Canadian Utilities 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 Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Canadian Utilities.
Diversification Opportunities for ASML Holding and Canadian Utilities
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between ASML and Canadian is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities 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 Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of ASML Holding i.e., ASML Holding and Canadian Utilities go up and down completely randomly.
Pair Corralation between ASML Holding and Canadian Utilities
Assuming the 90 days trading horizon ASML Holding NV is expected to generate 2.08 times more return on investment than Canadian Utilities. However, ASML Holding is 2.08 times more volatile than Canadian Utilities Limited. It trades about 0.15 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.25 per unit of risk. If you would invest 62,800 in ASML Holding NV on September 12, 2024 and sell it today you would earn a total of 4,310 from holding ASML Holding NV or generate 6.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASML Holding NV vs. Canadian Utilities Limited
Performance |
| Timeline |
| ASML Holding NV |
| Canadian Utilities |
ASML Holding and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML Holding and Canadian Utilities
The main advantage of trading using opposite ASML Holding and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| ASML Holding vs. Vulcan Materials | ASML Holding vs. Materialise NV | ASML Holding vs. Rayonier Advanced Materials | ASML Holding vs. Jupiter Fund Management |
| Canadian Utilities vs. Dominion Energy | Canadian Utilities vs. Sempra | Canadian Utilities vs. Superior Plus Corp | Canadian Utilities vs. NMI Holdings |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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