Correlation Between ASML Holding and BMO SP

Can any of the company-specific risk be diversified away by investing in both ASML Holding and BMO SP 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 BMO SP 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 BMO SP 500, you can compare the effects of market volatilities on ASML Holding and BMO SP 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 BMO SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASML Holding and BMO SP.

Diversification Opportunities for ASML Holding and BMO SP

0.58

Correlation Coefficient

ASML Holding  BMO SP

Very weak diversification

The 3 months correlation between ASML and BMO is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding ASML Holding NV and BMO SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO SP 500 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 BMO SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO SP 500 has no effect on the direction of ASML Holding i.e., ASML Holding and BMO SP go up and down completely randomly.

Pair Corralation between ASML Holding and BMO SP

Given the investment horizon of 90 days ASML Holding NV is expected to generate 4.3 times more return on investment than BMO SP. However, ASML Holding is 4.3 times more volatile than BMO SP 500. It trades about 0.15 of its potential returns per unit of risk. BMO SP 500 is currently generating about 0.29 per unit of risk. If you would invest  79,757  in ASML Holding NV on July 2, 2025 and sell it today you would earn a total of  16,504  from holding ASML Holding NV or generate 20.69% return on investment over 90 days.

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

ASML Holding NV  vs.  BMO SP 500

ASML Holding NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain primary indicators, ASML Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

BMO SP 500

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BMO SP 500 are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BMO SP may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Pair Trading with ASML Holding and BMO SP

The main advantage of trading using opposite ASML Holding and BMO SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASML Holding position performs unexpectedly, BMO SP 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 BMO SP will offset losses from the drop in BMO SP's long position.

The idea behind ASML Holding NV and BMO SP 500 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.