Correlation Between ASML Holding and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both ASML Holding and Unilever PLC 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 Unilever PLC 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 Unilever PLC, you can compare the effects of market volatilities on ASML Holding and Unilever PLC 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 Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Unilever PLC.
Diversification Opportunities for ASML Holding and Unilever PLC
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASML and Unilever is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC 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 Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC has no effect on the direction of ASML Holding i.e., ASML Holding and Unilever PLC go up and down completely randomly.
Pair Corralation between ASML Holding and Unilever PLC
Assuming the 90 days trading horizon ASML Holding NV is expected to under-perform the Unilever PLC. In addition to that, ASML Holding is 2.5 times more volatile than Unilever PLC. It trades about -0.06 of its total potential returns per unit of risk. Unilever PLC is currently generating about -0.07 per unit of volatility. If you would invest 5,538 in Unilever PLC on August 24, 2024 and sell it today you would lose (82.00) from holding Unilever PLC or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASML Holding NV vs. Unilever PLC
Performance |
| Timeline |
| ASML Holding NV |
| Unilever PLC |
ASML Holding and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML Holding and Unilever PLC
The main advantage of trading using opposite ASML Holding and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Unilever PLC 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 Unilever PLC will offset losses from the drop in Unilever PLC's long position.| ASML Holding vs. Adyen NV | ASML Holding vs. Prosus NV | ASML Holding vs. Koninklijke Philips NV | ASML Holding vs. Koninklijke Ahold Delhaize |
| Unilever PLC vs. Koninklijke Philips NV | Unilever PLC vs. Koninklijke Ahold Delhaize | Unilever PLC vs. ING Groep NV | Unilever PLC vs. Heineken |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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