Correlation Between MQGAU and ASML Holding

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

By analyzing existing cross correlation between MQGAU 5376057 23 SEP 27 and ASML Holding NV, you can compare the effects of market volatilities on MQGAU 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 MQGAU with a short position of ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of MQGAU and ASML Holding.

Diversification Opportunities for MQGAU and ASML Holding

0.46

Correlation Coefficient

MQGAU  ASML Holding

Very weak diversification

The 3 months correlation between MQGAU and ASML is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MQGAU 5376057 23 SEP 27 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 MQGAU 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 MQGAU 5376057 23 SEP 27 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 MQGAU i.e., MQGAU and ASML Holding go up and down completely randomly.

Pair Corralation between MQGAU and ASML Holding

Assuming the 90 days trading horizon MQGAU 5376057 23 SEP 27 is not expected to generate positive returns. However, MQGAU 5376057 23 SEP 27 is 42.99 times less risky than ASML Holding. It waists most of its returns potential to compensate for thr risk taken. ASML Holding is generating about 0.01 per unit of risk. If you would invest  71,025  in ASML Holding NV on December 5, 2024 and sell it today you would earn a total of  73.00  from holding ASML Holding NV or generate 0.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	22.03%
Values	Daily Returns

MQGAU 5376057 23 SEP 27  vs.  ASML Holding NV

MQGAU 5376057 23

Risk-Adjusted Performance

Very Weak

Over the last 90 days MQGAU 5376057 23 SEP 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MQGAU is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ASML Holding NV

Risk-Adjusted Performance

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 nearly stable essential indicators, ASML Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MQGAU and ASML Holding

The main advantage of trading using opposite MQGAU and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MQGAU 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 MQGAU 5376057 23 SEP 27 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.