Correlation Between Technology Select and Themes Cybersecurity
Can any of the company-specific risk be diversified away by investing in both Technology Select and Themes Cybersecurity 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 Technology Select and Themes Cybersecurity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology Select Sector and Themes Cybersecurity ETF, you can compare the effects of market volatilities on Technology Select and Themes Cybersecurity 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 Technology Select with a short position of Themes Cybersecurity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and Themes Cybersecurity.
Diversification Opportunities for Technology Select and Themes Cybersecurity
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Technology and Themes is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and Themes Cybersecurity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Cybersecurity ETF and Technology 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 Technology Select Sector are associated (or correlated) with Themes Cybersecurity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Cybersecurity ETF has no effect on the direction of Technology Select i.e., Technology Select and Themes Cybersecurity go up and down completely randomly.
Pair Corralation between Technology Select and Themes Cybersecurity
Considering the 90-day investment horizon Technology Select is expected to generate 1.83 times less return on investment than Themes Cybersecurity. But when comparing it to its historical volatility, Technology Select Sector is 1.05 times less risky than Themes Cybersecurity. It trades about 0.06 of its potential returns per unit of risk. Themes Cybersecurity ETF is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,943 in Themes Cybersecurity ETF on August 26, 2024 and sell it today you would earn a total of 82.00 from holding Themes Cybersecurity ETF or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Technology Select Sector vs. Themes Cybersecurity ETF
Performance |
| Timeline |
| Technology Select Sector |
| Themes Cybersecurity ETF |
Technology Select and Themes Cybersecurity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology Select and Themes Cybersecurity
The main advantage of trading using opposite Technology Select and Themes Cybersecurity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Select position performs unexpectedly, Themes Cybersecurity 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 Themes Cybersecurity will offset losses from the drop in Themes Cybersecurity's long position.| Technology Select vs. Invesco DWA Utilities | Technology Select vs. Invesco Dynamic Large | Technology Select vs. Invesco Dynamic Large | Technology Select vs. HUMANA INC |
| Themes Cybersecurity vs. iShares Dividend and | Themes Cybersecurity vs. Martin Currie Sustainable | Themes Cybersecurity vs. VictoryShares THB Mid | Themes Cybersecurity 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 Stocks Directory module to find actively traded stocks across global markets.
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