Correlation Between IShares MSCI and Tema ETF
Can any of the company-specific risk be diversified away by investing in both IShares MSCI 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 MSCI 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 MSCI China and Tema ETF Trust, you can compare the effects of market volatilities on IShares MSCI 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 MSCI with a short position of Tema ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Tema ETF.
Diversification Opportunities for IShares MSCI and Tema ETF
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Tema is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China 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 MSCI 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 MSCI China 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 MSCI i.e., IShares MSCI and Tema ETF go up and down completely randomly.
Pair Corralation between IShares MSCI and Tema ETF
Given the investment horizon of 90 days iShares MSCI China is expected to under-perform the Tema ETF. In addition to that, IShares MSCI is 1.32 times more volatile than Tema ETF Trust. It trades about -0.17 of its total potential returns per unit of risk. Tema ETF Trust is currently generating about 0.21 per unit of volatility. If you would invest 3,820 in Tema ETF Trust on August 30, 2024 and sell it today you would earn a total of 294.00 from holding Tema ETF Trust or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares MSCI China vs. Tema ETF Trust
Performance |
| Timeline |
| iShares MSCI China |
| Tema ETF Trust |
IShares MSCI and Tema ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Tema ETF
The main advantage of trading using opposite IShares MSCI and Tema ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 MSCI vs. KraneShares CSI China | IShares MSCI vs. Invesco China Technology | IShares MSCI vs. iShares MSCI India | IShares MSCI vs. Xtrackers Harvest CSI |
| Tema ETF vs. Freedom Day Dividend | Tema ETF vs. Franklin Templeton ETF | Tema ETF vs. iShares MSCI China | Tema ETF vs. Tidal Trust II |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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