Correlation Between ASML HOLDING and Yokohama Rubber
Can any of the company-specific risk be diversified away by investing in both ASML HOLDING and Yokohama Rubber 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 Yokohama Rubber 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 The Yokohama Rubber, you can compare the effects of market volatilities on ASML HOLDING and Yokohama Rubber 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 Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML HOLDING and Yokohama Rubber.
Diversification Opportunities for ASML HOLDING and Yokohama Rubber
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASML and Yokohama is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ASML HOLDING NY and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber 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 Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of ASML HOLDING i.e., ASML HOLDING and Yokohama Rubber go up and down completely randomly.
Pair Corralation between ASML HOLDING and Yokohama Rubber
Assuming the 90 days trading horizon ASML HOLDING NY is expected to generate 1.24 times more return on investment than Yokohama Rubber. However, ASML HOLDING is 1.24 times more volatile than The Yokohama Rubber. It trades about 0.03 of its potential returns per unit of risk. The Yokohama Rubber is currently generating about 0.02 per unit of risk. If you would invest 59,124 in ASML HOLDING NY on September 12, 2024 and sell it today you would earn a total of 8,276 from holding ASML HOLDING NY or generate 14.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASML HOLDING NY vs. The Yokohama Rubber
Performance |
| Timeline |
| ASML HOLDING NY |
| Yokohama Rubber |
ASML HOLDING and Yokohama Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML HOLDING and Yokohama Rubber
The main advantage of trading using opposite ASML HOLDING and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML HOLDING position performs unexpectedly, Yokohama Rubber 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 Yokohama Rubber will offset losses from the drop in Yokohama Rubber's long position.| ASML HOLDING vs. The Yokohama Rubber | ASML HOLDING vs. Heidelberg Materials AG | ASML HOLDING vs. Goodyear Tire Rubber | ASML HOLDING vs. Plastic Omnium |
| Yokohama Rubber vs. Apple Inc | Yokohama Rubber vs. Apple Inc | Yokohama Rubber vs. Apple Inc | Yokohama Rubber vs. Apple Inc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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