Correlation Between Veeco Instruments and ASML Holding
Can any of the company-specific risk be diversified away by investing in both Veeco Instruments 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 Veeco Instruments and ASML Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veeco Instruments and ASML Holding NV, you can compare the effects of market volatilities on Veeco Instruments 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 Veeco Instruments with a short position of ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veeco Instruments and ASML Holding.
Diversification Opportunities for Veeco Instruments and ASML Holding
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Veeco and ASML is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Veeco Instruments 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 Veeco Instruments 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 Veeco Instruments 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 Veeco Instruments i.e., Veeco Instruments and ASML Holding go up and down completely randomly.
Pair Corralation between Veeco Instruments and ASML Holding
Given the investment horizon of 90 days Veeco Instruments is expected to generate 1.21 times less return on investment than ASML Holding. But when comparing it to its historical volatility, Veeco Instruments is 1.09 times less risky than ASML Holding. It trades about 0.09 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 42,705 in ASML Holding NV on January 30, 2024 and sell it today you would earn a total of 49,192 from holding ASML Holding NV or generate 115.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Veeco Instruments vs. ASML Holding NV
Performance |
Timeline |
Veeco Instruments |
ASML Holding NV |
Veeco Instruments and ASML Holding Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Veeco Instruments and ASML Holding
The main advantage of trading using opposite Veeco Instruments and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veeco Instruments 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.Veeco Instruments vs. Aehr Test Systems | Veeco Instruments vs. Camtek | Veeco Instruments vs. Nova | Veeco Instruments vs. Cohu Inc |
ASML Holding vs. Aehr Test Systems | ASML Holding vs. Camtek | ASML Holding vs. Nova | ASML Holding vs. Cohu Inc |
Check out your portfolio center.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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