Correlation Between ASML Holding and Bridgford Foods

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

Diversification Opportunities for ASML Holding and Bridgford Foods

-0.11

Correlation Coefficient

ASML Holding  Bridgford Foods

Good diversification

The 3 months correlation between ASML and Bridgford is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods 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 Bridgford Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgford Foods has no effect on the direction of ASML Holding i.e., ASML Holding and Bridgford Foods go up and down completely randomly.

Pair Corralation between ASML Holding and Bridgford Foods

Given the investment horizon of 90 days ASML Holding NV is expected to generate 1.6 times more return on investment than Bridgford Foods. However, ASML Holding is 1.6 times more volatile than Bridgford Foods. It trades about 0.04 of its potential returns per unit of risk. Bridgford Foods is currently generating about -0.05 per unit of risk. If you would invest  70,418  in ASML Holding NV on December 20, 2024 and sell it today you would earn a total of  3,073  from holding ASML Holding NV or generate 4.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

ASML Holding NV  vs.  Bridgford Foods

ASML Holding NV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain primary indicators, ASML Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bridgford Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bridgford Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Bridgford Foods is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ASML Holding and Bridgford Foods

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

The idea behind ASML Holding NV and Bridgford Foods 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.