Correlation Between Triton International and ASML Holding

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

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

Diversification Opportunities for Triton International and ASML Holding

-0.07

Correlation Coefficient

Triton International  ASML Holding

Good diversification

The 3 months correlation between Triton and ASML is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited 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 Triton International 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 Triton International Limited 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 Triton International i.e., Triton International and ASML Holding go up and down completely randomly.

Pair Corralation between Triton International and ASML Holding

Assuming the 90 days trading horizon Triton International is expected to generate 14.03 times less return on investment than ASML Holding. But when comparing it to its historical volatility, Triton International Limited is 4.43 times less risky than ASML Holding. It trades about 0.01 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  70,418  in ASML Holding NV on December 20, 2024 and sell it today you would earn a total of  2,988  from holding ASML Holding NV or generate 4.24% return on investment over 90 days.

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

Triton International Limited  vs.  ASML Holding NV

Triton International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Triton International Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Triton International is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ASML Holding NV

Risk-Adjusted Performance

Insignificant

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.

Pair Trading with Triton International and ASML Holding

The main advantage of trading using opposite Triton International and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triton International 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 Triton International Limited 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.