Correlation Between VanEck Biotech and Tema ETF
Can any of the company-specific risk be diversified away by investing in both VanEck Biotech and Tema ETF 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 VanEck Biotech and Tema ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Biotech ETF and Tema ETF Trust, you can compare the effects of market volatilities on VanEck Biotech and Tema ETF 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 VanEck Biotech with a short position of Tema ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Biotech and Tema ETF.
Diversification Opportunities for VanEck Biotech and Tema ETF
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between VanEck and Tema is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Biotech ETF and Tema ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tema ETF Trust and VanEck Biotech 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 VanEck Biotech ETF are associated (or correlated) with Tema ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tema ETF Trust has no effect on the direction of VanEck Biotech i.e., VanEck Biotech and Tema ETF go up and down completely randomly.
Pair Corralation between VanEck Biotech and Tema ETF
Considering the 90-day investment horizon VanEck Biotech ETF is expected to generate 1.03 times more return on investment than Tema ETF. However, VanEck Biotech is 1.03 times more volatile than Tema ETF Trust. It trades about 0.01 of its potential returns per unit of risk. Tema ETF Trust is currently generating about 0.01 per unit of risk. If you would invest 15,438 in VanEck Biotech ETF on November 19, 2024 and sell it today you would earn a total of 618.00 from holding VanEck Biotech ETF or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.72% |
| Values | Daily Returns |
VanEck Biotech ETF vs. Tema ETF Trust
Performance |
| Timeline |
| VanEck Biotech ETF |
| Tema ETF Trust |
VanEck Biotech and Tema ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Biotech and Tema ETF
The main advantage of trading using opposite VanEck Biotech and Tema ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Biotech position performs unexpectedly, Tema ETF 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 Tema ETF will offset losses from the drop in Tema ETF's long position.| VanEck Biotech vs. VanEck Pharmaceutical ETF | VanEck Biotech vs. VanEck Retail ETF | VanEck Biotech vs. First Trust NYSE | VanEck Biotech vs. Invesco Dynamic Biotechnology |
| Tema ETF vs. Smith Nephew SNATS | Tema ETF vs. Fresenius Medical Care | Tema ETF vs. Fomento Economico Mexicano | Tema ETF vs. The Cooper Companies, |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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