Correlation Between Industrial Select and Tema ETF
Can any of the company-specific risk be diversified away by investing in both Industrial Select 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 Industrial Select and Tema ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Select Sector and Tema ETF Trust, you can compare the effects of market volatilities on Industrial Select 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 Industrial Select with a short position of Tema ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Select and Tema ETF.
Diversification Opportunities for Industrial Select and Tema ETF
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Industrial and Tema is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Select Sector 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 Industrial Select 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 Industrial Select Sector 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 Industrial Select i.e., Industrial Select and Tema ETF go up and down completely randomly.
Pair Corralation between Industrial Select and Tema ETF
Considering the 90-day investment horizon Industrial Select Sector is expected to generate 0.74 times more return on investment than Tema ETF. However, Industrial Select Sector is 1.35 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 13,312 in Industrial Select Sector on October 23, 2024 and sell it today you would earn a total of 463.00 from holding Industrial Select Sector or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Select Sector vs. Tema ETF Trust
Performance |
| Timeline |
| Industrial Select Sector |
| Tema ETF Trust |
Industrial Select and Tema ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Select and Tema ETF
The main advantage of trading using opposite Industrial Select and Tema ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Select 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.| Industrial Select vs. Materials Select Sector | Industrial Select vs. Consumer Discretionary Select | Industrial Select vs. Consumer Staples Select | Industrial Select vs. Health Care Select |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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