Correlation Between ASML Holding and Everspin Technologies

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

Diversification Opportunities for ASML Holding and Everspin Technologies

0.56

Correlation Coefficient

ASML Holding  Everspin Technologies

Very weak diversification

The 3 months correlation between ASML and Everspin is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies 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 Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of ASML Holding i.e., ASML Holding and Everspin Technologies go up and down completely randomly.

Pair Corralation between ASML Holding and Everspin Technologies

Given the investment horizon of 90 days ASML Holding NV is expected to generate 1.03 times more return on investment than Everspin Technologies. However, ASML Holding is 1.03 times more volatile than Everspin Technologies. It trades about 0.07 of its potential returns per unit of risk. Everspin Technologies is currently generating about 0.04 per unit of risk. If you would invest  71,586  in ASML Holding NV on October 26, 2024 and sell it today you would earn a total of  2,110  from holding ASML Holding NV or generate 2.95% return on investment over 90 days.

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

ASML Holding NV  vs.  Everspin Technologies

ASML Holding NV

Risk-Adjusted Performance

3 of 100

Modest

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 persistent primary indicators, ASML Holding is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Everspin Technologies

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Everspin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Everspin Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ASML Holding and Everspin Technologies

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

The idea behind ASML Holding NV and Everspin Technologies 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 Stocks Directory module to find actively traded stocks across global markets.