Correlation Between SWK Holdings and ASML Holding

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

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

Diversification Opportunities for SWK Holdings and ASML Holding

0.59

Correlation Coefficient

SWK Holdings  ASML Holding

Very weak diversification

The 3 months correlation between SWK and ASML is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SWK Holdings 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 SWK Holdings 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 SWK Holdings 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 SWK Holdings i.e., SWK Holdings and ASML Holding go up and down completely randomly.

Pair Corralation between SWK Holdings and ASML Holding

Assuming the 90 days horizon SWK Holdings is expected to generate 3.1 times less return on investment than ASML Holding. But when comparing it to its historical volatility, SWK Holdings is 7.9 times less risky than ASML Holding. It trades about 0.14 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  66,964  in ASML Holding NV on April 24, 2025 and sell it today you would earn a total of  4,036  from holding ASML Holding NV or generate 6.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

SWK Holdings  vs.  ASML Holding NV

SWK Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SWK Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, SWK Holdings is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

ASML Holding NV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, ASML Holding may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with SWK Holdings and ASML Holding

The main advantage of trading using opposite SWK Holdings and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWK Holdings 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 SWK Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.