Correlation Between ASML Holding and Principal Financial
Can any of the company-specific risk be diversified away by investing in both ASML Holding and Principal Financial 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 Principal Financial 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 Principal Financial Group, you can compare the effects of market volatilities on ASML Holding and Principal Financial 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 Principal Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Principal Financial.
Diversification Opportunities for ASML Holding and Principal Financial
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ASML and Principal is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Principal Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Financial 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 Principal Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Financial has no effect on the direction of ASML Holding i.e., ASML Holding and Principal Financial go up and down completely randomly.
Pair Corralation between ASML Holding and Principal Financial
Assuming the 90 days trading horizon ASML Holding NV is expected to generate 1.55 times more return on investment than Principal Financial. However, ASML Holding is 1.55 times more volatile than Principal Financial Group. It trades about 0.22 of its potential returns per unit of risk. Principal Financial Group is currently generating about 0.17 per unit of risk. If you would invest 68,360 in ASML Holding NV on October 25, 2024 and sell it today you would earn a total of 5,630 from holding ASML Holding NV or generate 8.24% 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. Principal Financial Group
Performance |
| Timeline |
| ASML Holding NV |
| Principal Financial |
ASML Holding and Principal Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML Holding and Principal Financial
The main advantage of trading using opposite ASML Holding and Principal Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Principal Financial 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 Principal Financial will offset losses from the drop in Principal Financial's long position.| ASML Holding vs. Sun Life Financial | ASML Holding vs. REVO INSURANCE SPA | ASML Holding vs. BANK OF CHINA | ASML Holding vs. REINET INVESTMENTS SCA |
| Principal Financial vs. Broadridge Financial Solutions | Principal Financial vs. TRAVEL LEISURE DL 01 | Principal Financial vs. Gaztransport Technigaz SA | Principal Financial vs. Nishi Nippon Railroad Co |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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