Correlation Between Tema ETF and First Trust
Can any of the company-specific risk be diversified away by investing in both Tema ETF and First Trust 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 Tema ETF and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tema ETF Trust and First Trust SkyBridge, you can compare the effects of market volatilities on Tema ETF and First Trust 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 Tema ETF with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tema ETF and First Trust.
Diversification Opportunities for Tema ETF and First Trust
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tema and First is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Tema ETF Trust and First Trust SkyBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust SkyBridge and Tema ETF 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 Tema ETF Trust are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust SkyBridge has no effect on the direction of Tema ETF i.e., Tema ETF and First Trust go up and down completely randomly.
Pair Corralation between Tema ETF and First Trust
Considering the 90-day investment horizon Tema ETF Trust is expected to under-perform the First Trust. But the etf apears to be less risky and, when comparing its historical volatility, Tema ETF Trust is 7.85 times less risky than First Trust. The etf trades about -0.1 of its potential returns per unit of risk. The First Trust SkyBridge is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,536 in First Trust SkyBridge on August 31, 2024 and sell it today you would earn a total of 521.00 from holding First Trust SkyBridge or generate 33.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tema ETF Trust vs. First Trust SkyBridge
Performance |
| Timeline |
| Tema ETF Trust |
| First Trust SkyBridge |
Tema ETF and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tema ETF and First Trust
The main advantage of trading using opposite Tema ETF and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tema ETF position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Tema ETF vs. Invesco Dynamic Food | Tema ETF vs. Invesco Dynamic Building | Tema ETF vs. Invesco DWA Utilities | Tema ETF vs. Aquagold International |
| First Trust vs. Siren Nasdaq NexGen | First Trust vs. Amplify Transformational Data | First Trust vs. Global X Blockchain | First Trust vs. VanEck Digital Transformation |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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