Correlation Between ASML HOLDING and KLA
Can any of the company-specific risk be diversified away by investing in both ASML HOLDING and KLA 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 KLA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASML HOLDING NY and KLA Corporation, you can compare the effects of market volatilities on ASML HOLDING and KLA 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 KLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML HOLDING and KLA.
Diversification Opportunities for ASML HOLDING and KLA
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ASML and KLA is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ASML HOLDING NY and KLA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Corporation 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 NY are associated (or correlated) with KLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Corporation has no effect on the direction of ASML HOLDING i.e., ASML HOLDING and KLA go up and down completely randomly.
Pair Corralation between ASML HOLDING and KLA
Assuming the 90 days trading horizon ASML HOLDING NY is expected to generate 0.77 times more return on investment than KLA. However, ASML HOLDING NY is 1.3 times less risky than KLA. It trades about 0.01 of its potential returns per unit of risk. KLA Corporation is currently generating about -0.02 per unit of risk. If you would invest 65,436 in ASML HOLDING NY on August 28, 2024 and sell it today you would lose (36.00) from holding ASML HOLDING NY or give up 0.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASML HOLDING NY vs. KLA Corp.
Performance |
| Timeline |
| ASML HOLDING NY |
| KLA Corporation |
ASML HOLDING and KLA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML HOLDING and KLA
The main advantage of trading using opposite ASML HOLDING and KLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML HOLDING position performs unexpectedly, KLA 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 KLA will offset losses from the drop in KLA's long position.| ASML HOLDING vs. CARSALESCOM | ASML HOLDING vs. Sims Metal Management | ASML HOLDING vs. Transport International Holdings | ASML HOLDING vs. Perdoceo Education |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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