Correlation Between ASML Holding and Nasdaq
Can any of the company-specific risk be diversified away by investing in both ASML Holding and Nasdaq 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 Nasdaq 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 Nasdaq Inc, you can compare the effects of market volatilities on ASML Holding and Nasdaq 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 Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Nasdaq.
Diversification Opportunities for ASML Holding and Nasdaq
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ASML and Nasdaq is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc 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 Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of ASML Holding i.e., ASML Holding and Nasdaq go up and down completely randomly.
Pair Corralation between ASML Holding and Nasdaq
Given the investment horizon of 90 days ASML Holding NV is expected to generate 1.45 times more return on investment than Nasdaq. However, ASML Holding is 1.45 times more volatile than Nasdaq Inc. It trades about -0.08 of its potential returns per unit of risk. Nasdaq Inc is currently generating about -0.25 per unit of risk. If you would invest 70,908 in ASML Holding NV on December 30, 2024 and sell it today you would lose (3,450) from holding ASML Holding NV or give up 4.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASML Holding NV vs. Nasdaq Inc
Performance |
| Timeline |
| ASML Holding NV |
| Nasdaq Inc |
ASML Holding and Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML Holding and Nasdaq
The main advantage of trading using opposite ASML Holding and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Nasdaq 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 Nasdaq will offset losses from the drop in Nasdaq's long position.| ASML Holding vs. Applied Materials | ||
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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