Correlation Between Dow Jones and ASML Holding
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ASML Holding 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 Dow Jones and ASML Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and ASML Holding NV, you can compare the effects of market volatilities on Dow Jones and ASML Holding 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 Dow Jones with a short position of ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ASML Holding.
Diversification Opportunities for Dow Jones and ASML Holding
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and ASML is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ASML Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML Holding NV and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with ASML Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML Holding NV has no effect on the direction of Dow Jones i.e., Dow Jones and ASML Holding go up and down completely randomly.
Pair Corralation between Dow Jones and ASML Holding
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.03 times less return on investment than ASML Holding. But when comparing it to its historical volatility, Dow Jones Industrial is 3.41 times less risky than ASML Holding. It trades about 0.08 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 58,255 in ASML Holding NV on August 27, 2024 and sell it today you would earn a total of 9,033 from holding ASML Holding NV or generate 15.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. ASML Holding NV
Performance |
| Timeline |
Dow Jones and ASML Holding Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ASML Holding NV
Pair trading matchups for ASML Holding
Pair Trading with Dow Jones and ASML Holding
The main advantage of trading using opposite Dow Jones and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ASML Holding 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 ASML Holding will offset losses from the drop in ASML Holding's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| ASML Holding vs. Applied Materials | ASML Holding vs. KLA Tencor | ASML Holding vs. Axcelis Technologies | ASML Holding vs. Teradyne |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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