Correlation Between Everspin Technologies and ASML Holding

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

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

Diversification Opportunities for Everspin Technologies and ASML Holding

0.2

Correlation Coefficient

Everspin Technologies  ASML Holding

Modest diversification

The 3 months correlation between Everspin and ASML is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Everspin Technologies 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 Everspin Technologies 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 Everspin Technologies 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 Everspin Technologies i.e., Everspin Technologies and ASML Holding go up and down completely randomly.

Pair Corralation between Everspin Technologies and ASML Holding

Given the investment horizon of 90 days Everspin Technologies is expected to under-perform the ASML Holding. But the stock apears to be less risky and, when comparing its historical volatility, Everspin Technologies is 1.15 times less risky than ASML Holding. The stock trades about -0.03 of its potential returns per unit of risk. The ASML Holding NV is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  70,527  in ASML Holding NV on October 11, 2024 and sell it today you would earn a total of  3,871  from holding ASML Holding NV or generate 5.49% return on investment over 90 days.

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

Everspin Technologies  vs.  ASML Holding NV

Everspin Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everspin Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

ASML Holding NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASML Holding NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Everspin Technologies and ASML Holding

The main advantage of trading using opposite Everspin Technologies and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everspin Technologies 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 Everspin Technologies 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.