Correlation Between Tema ETF and Freedom Day
Can any of the company-specific risk be diversified away by investing in both Tema ETF and Freedom Day 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 Freedom Day 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 Freedom Day Dividend, you can compare the effects of market volatilities on Tema ETF and Freedom Day 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 Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tema ETF and Freedom Day.
Diversification Opportunities for Tema ETF and Freedom Day
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tema and Freedom is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tema ETF Trust and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend 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 Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of Tema ETF i.e., Tema ETF and Freedom Day go up and down completely randomly.
Pair Corralation between Tema ETF and Freedom Day
Given the investment horizon of 90 days Tema ETF Trust is expected to under-perform the Freedom Day. In addition to that, Tema ETF is 1.65 times more volatile than Freedom Day Dividend. It trades about 0.0 of its total potential returns per unit of risk. Freedom Day Dividend is currently generating about 0.02 per unit of volatility. If you would invest 3,389 in Freedom Day Dividend on November 28, 2024 and sell it today you would earn a total of 37.70 from holding Freedom Day Dividend or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.18% |
| Values | Daily Returns |
Tema ETF Trust vs. Freedom Day Dividend
Performance |
| Timeline |
| Tema ETF Trust |
| Freedom Day Dividend |
Tema ETF and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tema ETF and Freedom Day
The main advantage of trading using opposite Tema ETF and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tema ETF position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day's long position.| Tema ETF vs. Strategy Shares | Tema ETF vs. Freedom Day Dividend | Tema ETF vs. Franklin Templeton ETF | Tema ETF vs. iShares MSCI China |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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