Correlation Between Unilever PLC and ASML Holding
Can any of the company-specific risk be diversified away by investing in both Unilever PLC 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 Unilever PLC and ASML Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever PLC and ASML Holding NV, you can compare the effects of market volatilities on Unilever PLC 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 Unilever PLC with a short position of ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and ASML Holding.
Diversification Opportunities for Unilever PLC and ASML Holding
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Unilever and ASML is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC 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 Unilever PLC 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 Unilever PLC 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 Unilever PLC i.e., Unilever PLC and ASML Holding go up and down completely randomly.
Pair Corralation between Unilever PLC and ASML Holding
Assuming the 90 days trading horizon Unilever PLC is expected to under-perform the ASML Holding. But the stock apears to be less risky and, when comparing its historical volatility, Unilever PLC is 2.38 times less risky than ASML Holding. The stock trades about -0.09 of its potential returns per unit of risk. The ASML Holding NV is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 65,398 in ASML Holding NV on August 27, 2024 and sell it today you would lose (198.00) from holding ASML Holding NV or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC vs. ASML Holding NV
Performance |
| Timeline |
| Unilever PLC |
| ASML Holding NV |
Unilever PLC and ASML Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and ASML Holding
The main advantage of trading using opposite Unilever PLC and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC 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.| Unilever PLC vs. Koninklijke Philips NV | Unilever PLC vs. Koninklijke Ahold Delhaize | Unilever PLC vs. ING Groep NV | Unilever PLC vs. Heineken |
| ASML Holding vs. Adyen NV | ASML Holding vs. Prosus NV | ASML Holding vs. Koninklijke Philips NV | ASML Holding vs. Koninklijke Ahold Delhaize |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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