Correlation Between ASML Holding and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ASML Holding and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on ASML Holding and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Dow Jones.
Diversification Opportunities for ASML Holding and Dow Jones
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ASML and Dow is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of ASML Holding i.e., ASML Holding and Dow Jones go up and down completely randomly.
Pair Corralation between ASML Holding and Dow Jones
Assuming the 90 days trading horizon ASML Holding is expected to generate 18.06 times less return on investment than Dow Jones. In addition to that, ASML Holding is 2.49 times more volatile than Dow Jones Industrial. It trades about 0.01 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASML Holding NV vs. Dow Jones Industrial
Performance |
| Timeline |
ASML Holding and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ASML Holding NV
Pair trading matchups for ASML Holding
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ASML Holding and Dow Jones
The main advantage of trading using opposite ASML Holding and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| ASML Holding vs. Adyen NV | ASML Holding vs. Prosus NV | ASML Holding vs. Koninklijke Philips NV | ASML Holding vs. Koninklijke Ahold Delhaize |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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