Correlation Between Energy Transfer and ASML Holding

Can any of the company-specific risk be diversified away by investing in both Energy Transfer 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 Energy Transfer and ASML Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energy Transfer LP and ASML Holding NV, you can compare the effects of market volatilities on Energy Transfer 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 Energy Transfer with a short position of ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Transfer and ASML Holding.

Diversification Opportunities for Energy Transfer and ASML Holding

0.37

Correlation Coefficient

Energy Transfer  ASML Holding

Weak diversification

The 3 months correlation between Energy and ASML is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Energy Transfer LP 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 Energy Transfer 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 Energy Transfer LP 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 Energy Transfer i.e., Energy Transfer and ASML Holding go up and down completely randomly.

Pair Corralation between Energy Transfer and ASML Holding

Allowing for the 90-day total investment horizon Energy Transfer LP is expected to generate 0.68 times more return on investment than ASML Holding. However, Energy Transfer LP is 1.47 times less risky than ASML Holding. It trades about 0.41 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.19 per unit of risk. If you would invest  1,827  in Energy Transfer LP on October 20, 2024 and sell it today you would earn a total of  202.00  from holding Energy Transfer LP or generate 11.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Energy Transfer LP  vs.  ASML Holding NV

Energy Transfer LP

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Transfer LP are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Energy Transfer unveiled solid returns over the last few months and may actually be approaching a breakup point.

ASML Holding NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, ASML Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Energy Transfer and ASML Holding

The main advantage of trading using opposite Energy Transfer and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Transfer 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.

The idea behind Energy Transfer LP and ASML Holding NV 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 CEOs Directory module to screen CEOs from public companies around the world.