Correlation Between ASML Holding and Boot Barn

Can any of the company-specific risk be diversified away by investing in both ASML Holding and Boot Barn 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 Boot Barn 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 Boot Barn Holdings, you can compare the effects of market volatilities on ASML Holding and Boot Barn 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 Boot Barn. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and Boot Barn.

Diversification Opportunities for ASML Holding and Boot Barn

0.64

Correlation Coefficient

ASML Holding  Boot Barn

Poor diversification

The 3 months correlation between ASML and Boot is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Boot Barn Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boot Barn Holdings 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 Boot Barn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boot Barn Holdings has no effect on the direction of ASML Holding i.e., ASML Holding and Boot Barn go up and down completely randomly.

Pair Corralation between ASML Holding and Boot Barn

Given the investment horizon of 90 days ASML Holding is expected to generate 1.56 times less return on investment than Boot Barn. But when comparing it to its historical volatility, ASML Holding NV is 1.2 times less risky than Boot Barn. It trades about 0.14 of its potential returns per unit of risk. Boot Barn Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  13,641  in Boot Barn Holdings on October 11, 2024 and sell it today you would earn a total of  2,393  from holding Boot Barn Holdings or generate 17.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ASML Holding NV  vs.  Boot Barn Holdings

ASML Holding NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASML Holding NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Boot Barn Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boot Barn Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Boot Barn is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ASML Holding and Boot Barn

The main advantage of trading using opposite ASML Holding and Boot Barn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, Boot Barn 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 Boot Barn will offset losses from the drop in Boot Barn's long position.

The idea behind ASML Holding NV and Boot Barn Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.