Correlation Between IShares Aerospace and Tema ETF
Can any of the company-specific risk be diversified away by investing in both IShares Aerospace 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 IShares Aerospace and Tema ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Aerospace Defense and Tema ETF Trust, you can compare the effects of market volatilities on IShares Aerospace 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 IShares Aerospace with a short position of Tema ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Aerospace and Tema ETF.
Diversification Opportunities for IShares Aerospace and Tema ETF
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Tema is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding iShares Aerospace Defense 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 IShares Aerospace 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 iShares Aerospace Defense 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 IShares Aerospace i.e., IShares Aerospace and Tema ETF go up and down completely randomly.
Pair Corralation between IShares Aerospace and Tema ETF
Considering the 90-day investment horizon iShares Aerospace Defense is expected to generate 0.75 times more return on investment than Tema ETF. However, iShares Aerospace Defense is 1.34 times less risky than Tema ETF. It trades about 0.26 of its potential returns per unit of risk. Tema ETF Trust is currently generating about 0.18 per unit of risk. If you would invest 14,651 in iShares Aerospace Defense on October 23, 2024 and sell it today you would earn a total of 511.00 from holding iShares Aerospace Defense or generate 3.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Aerospace Defense vs. Tema ETF Trust
Performance |
| Timeline |
| iShares Aerospace Defense |
| Tema ETF Trust |
IShares Aerospace and Tema ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Aerospace and Tema ETF
The main advantage of trading using opposite IShares Aerospace and Tema ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Aerospace 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.| IShares Aerospace vs. SPDR SP Aerospace | IShares Aerospace vs. Invesco Aerospace Defense | IShares Aerospace vs. iShares Medical Devices | IShares Aerospace vs. iShares Expanded Tech Software |
| Tema ETF vs. iShares Dividend and | Tema ETF vs. Martin Currie Sustainable | Tema ETF vs. VictoryShares THB Mid | Tema ETF vs. Mast Global Battery |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |