Correlation Between DAX Index and ASML HOLDING

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

By analyzing existing cross correlation between DAX Index and ASML HOLDING NY, you can compare the effects of market volatilities on DAX Index 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 DAX Index with a short position of ASML HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and ASML HOLDING.

Diversification Opportunities for DAX Index and ASML HOLDING

-0.39

Correlation Coefficient

DAX Index  ASML HOLDING

Very good diversification

The 3 months correlation between DAX and ASML is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and ASML HOLDING NY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML HOLDING NY and DAX Index 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 DAX Index 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 NY has no effect on the direction of DAX Index i.e., DAX Index and ASML HOLDING go up and down completely randomly.

Pair Corralation between DAX Index and ASML HOLDING

Assuming the 90 days trading horizon DAX Index is expected to generate 0.47 times more return on investment than ASML HOLDING. However, DAX Index is 2.11 times less risky than ASML HOLDING. It trades about 0.17 of its potential returns per unit of risk. ASML HOLDING NY is currently generating about -0.02 per unit of risk. If you would invest  1,990,914  in DAX Index on December 29, 2024 and sell it today you would earn a total of  255,238  from holding DAX Index or generate 12.82% return on investment over 90 days.

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

DAX Index  vs.  ASML HOLDING NY

Pair Trading with DAX Index and ASML HOLDING

The main advantage of trading using opposite DAX Index and ASML HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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 DAX Index and ASML HOLDING NY 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..