Correlation Between Tema Luxury and United States

Can any of the company-specific risk be diversified away by investing in both Tema Luxury and United States 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 Luxury and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tema Luxury ETF and United States Natural, you can compare the effects of market volatilities on Tema Luxury and United States 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 Luxury with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tema Luxury and United States.

Diversification Opportunities for Tema Luxury and United States

-0.09

Correlation Coefficient

Tema Luxury  United States

Good diversification

The 3 months correlation between Tema and United is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Tema Luxury ETF and United States Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Natural and Tema Luxury 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 Luxury ETF are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Natural has no effect on the direction of Tema Luxury i.e., Tema Luxury and United States go up and down completely randomly.

Pair Corralation between Tema Luxury and United States

Considering the 90-day investment horizon Tema Luxury ETF is expected to generate 0.24 times more return on investment than United States. However, Tema Luxury ETF is 4.2 times less risky than United States. It trades about 0.0 of its potential returns per unit of risk. United States Natural is currently generating about -0.07 per unit of risk. If you would invest  2,501  in Tema Luxury ETF on February 5, 2024 and sell it today you would lose (39.00) from holding Tema Luxury ETF or give up 1.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	49.9%
Values	Daily Returns

Tema Luxury ETF  vs.  United States Natural

Tema Luxury ETF

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tema Luxury ETF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Tema Luxury is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

United States Natural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Natural has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Pair Trading with Tema Luxury and United States

The main advantage of trading using opposite Tema Luxury and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tema Luxury position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.

The idea behind Tema Luxury ETF and United States Natural pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.