Correlation Between Micron Technology and ASML Holding
Can any of the company-specific risk be diversified away by investing in both Micron Technology 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 Micron Technology and ASML Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and ASML Holding NV, you can compare the effects of market volatilities on Micron Technology 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 Micron Technology with a short position of ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and ASML Holding.
Diversification Opportunities for Micron Technology and ASML Holding
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Micron and ASML is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology 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 Micron Technology 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 Micron Technology 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 Micron Technology i.e., Micron Technology and ASML Holding go up and down completely randomly.
Pair Corralation between Micron Technology and ASML Holding
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 1.22 times more return on investment than ASML Holding. However, Micron Technology is 1.22 times more volatile than ASML Holding NV. It trades about 0.03 of its potential returns per unit of risk. ASML Holding NV is currently generating about -0.02 per unit of risk. If you would invest 8,452 in Micron Technology on November 4, 2024 and sell it today you would earn a total of 672.00 from holding Micron Technology or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. ASML Holding NV
Performance |
| Timeline |
| Micron Technology |
| ASML Holding NV |
Micron Technology and ASML Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and ASML Holding
The main advantage of trading using opposite Micron Technology and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology 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.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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