Correlation Between ASML Holding and Micron Technology
Can any of the company-specific risk be diversified away by investing in both ASML Holding and Micron Technology 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 Micron Technology 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 Micron Technology, you can compare the effects of market volatilities on ASML Holding and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Micron Technology.
Diversification Opportunities for ASML Holding and Micron Technology
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ASML and Micron is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of ASML Holding i.e., ASML Holding and Micron Technology go up and down completely randomly.
Pair Corralation between ASML Holding and Micron Technology
Given the investment horizon of 90 days ASML Holding is expected to generate 3.39 times less return on investment than Micron Technology. But when comparing it to its historical volatility, ASML Holding NV is 1.54 times less risky than Micron Technology. It trades about 0.13 of its potential returns per unit of risk. Micron Technology is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 8,960 in Micron Technology on October 24, 2024 and sell it today you would earn a total of 1,615 from holding Micron Technology or generate 18.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASML Holding NV vs. Micron Technology
Performance |
| Timeline |
| ASML Holding NV |
| Micron Technology |
ASML Holding and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML Holding and Micron Technology
The main advantage of trading using opposite ASML Holding and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| ASML Holding vs. Applied Materials | ASML Holding vs. KLA Tencor | ASML Holding vs. Axcelis Technologies | ASML Holding vs. Teradyne |
| Micron Technology vs. First Solar | Micron Technology vs. Sunrun Inc | Micron Technology vs. Canadian Solar | Micron Technology vs. SolarEdge Technologies |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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