Correlation Between First Trust and Tema ETF
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Tema ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dorsey and Tema ETF Trust, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Tema ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Tema ETF.
Diversification Opportunities for First Trust and Tema ETF
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Tema is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey 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 First Trust 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 First Trust Dorsey 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 First Trust i.e., First Trust and Tema ETF go up and down completely randomly.
Pair Corralation between First Trust and Tema ETF
Allowing for the 90-day total investment horizon First Trust is expected to generate 54.78 times less return on investment than Tema ETF. But when comparing it to its historical volatility, First Trust Dorsey is 41.99 times less risky than Tema ETF. It trades about 0.04 of its potential returns per unit of risk. Tema ETF Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Tema ETF Trust on August 23, 2024 and sell it today you would earn a total of 3,986 from holding Tema ETF Trust or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 78.23% |
| Values | Daily Returns |
First Trust Dorsey vs. Tema ETF Trust
Performance |
| Timeline |
| First Trust Dorsey |
| Tema ETF Trust |
First Trust and Tema ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Tema ETF
The main advantage of trading using opposite First Trust and Tema ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust Dorsey | First Trust vs. Invesco DWA Momentum | First Trust vs. First Trust Capital | First Trust vs. First Trust Large |
| Tema ETF vs. Franklin Templeton ETF | Tema ETF vs. Tidal Trust II | Tema ETF vs. Tidal Trust II | Tema ETF vs. iShares Dividend and |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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