Correlation Between ASML Holding and Extra Space

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

Diversification Opportunities for ASML Holding and Extra Space

-0.08

Correlation Coefficient

ASML Holding  Extra Space

Good diversification

The 3 months correlation between ASML and Extra is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage 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 Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of ASML Holding i.e., ASML Holding and Extra Space go up and down completely randomly.

Pair Corralation between ASML Holding and Extra Space

Assuming the 90 days trading horizon ASML Holding NV is expected to generate 1.91 times more return on investment than Extra Space. However, ASML Holding is 1.91 times more volatile than Extra Space Storage. It trades about 0.0 of its potential returns per unit of risk. Extra Space Storage is currently generating about -0.25 per unit of risk. If you would invest  8,080  in ASML Holding NV on October 26, 2024 and sell it today you would lose (88.00) from holding ASML Holding NV or give up 1.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

ASML Holding NV  vs.  Extra Space Storage

ASML Holding NV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, ASML Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Extra Space Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Extra Space Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Extra Space is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ASML Holding and Extra Space

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

The idea behind ASML Holding NV and Extra Space Storage 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.