Correlation Between ASML Holding and IShares NASDAQ
Can any of the company-specific risk be diversified away by investing in both ASML Holding and IShares NASDAQ 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 ASML Holding and IShares NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASML Holding NV and iShares NASDAQ 100, you can compare the effects of market volatilities on ASML Holding and IShares NASDAQ 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 ASML Holding with a short position of IShares NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and IShares NASDAQ.
Diversification Opportunities for ASML Holding and IShares NASDAQ
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ASML and IShares is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and iShares NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares NASDAQ 100 and ASML Holding 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 ASML Holding NV are associated (or correlated) with IShares NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares NASDAQ 100 has no effect on the direction of ASML Holding i.e., ASML Holding and IShares NASDAQ go up and down completely randomly.
Pair Corralation between ASML Holding and IShares NASDAQ
Given the investment horizon of 90 days ASML Holding is expected to generate 9.22 times less return on investment than IShares NASDAQ. In addition to that, ASML Holding is 2.76 times more volatile than iShares NASDAQ 100. It trades about 0.01 of its total potential returns per unit of risk. iShares NASDAQ 100 is currently generating about 0.25 per unit of volatility. If you would invest 121,380 in iShares NASDAQ 100 on May 25, 2025 and sell it today you would earn a total of 13,700 from holding iShares NASDAQ 100 or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASML Holding NV vs. iShares NASDAQ 100
Performance |
| Timeline |
| ASML Holding NV |
| iShares NASDAQ 100 |
ASML Holding and IShares NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASML Holding and IShares NASDAQ
The main advantage of trading using opposite ASML Holding and IShares NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, IShares NASDAQ 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 IShares NASDAQ will offset losses from the drop in IShares NASDAQ's long position.| ASML Holding vs. Applied Materials | ASML Holding vs. KLA Tencor | ASML Holding vs. Axcelis Technologies | ASML Holding vs. Teradyne |
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against IShares NASDAQ as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. IShares NASDAQ's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, IShares NASDAQ's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to iShares NASDAQ 100.
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |