Correlation Between Tema ETF and Simplify Volatility

Can any of the company-specific risk be diversified away by investing in both Tema ETF and Simplify Volatility 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 Simplify Volatility 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 Simplify Volatility Premium, you can compare the effects of market volatilities on Tema ETF and Simplify Volatility 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 Simplify Volatility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tema ETF and Simplify Volatility.

Diversification Opportunities for Tema ETF and Simplify Volatility

0.91

Correlation Coefficient

Tema ETF  Simplify Volatility

Almost no diversification

The 3 months correlation between Tema and Simplify is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Tema ETF Trust and Simplify Volatility Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Volatility 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 Simplify Volatility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Volatility has no effect on the direction of Tema ETF i.e., Tema ETF and Simplify Volatility go up and down completely randomly.

Pair Corralation between Tema ETF and Simplify Volatility

Given the investment horizon of 90 days Tema ETF is expected to generate 1.57 times less return on investment than Simplify Volatility. But when comparing it to its historical volatility, Tema ETF Trust is 2.24 times less risky than Simplify Volatility. It trades about 0.14 of its potential returns per unit of risk. Simplify Volatility Premium is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,603  in Simplify Volatility Premium on August 11, 2025 and sell it today you would earn a total of  134.00  from holding Simplify Volatility Premium or generate 8.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Tema ETF Trust  vs.  Simplify Volatility Premium

Tema ETF Trust

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Tema ETF Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Tema ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Simplify Volatility

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Volatility Premium are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Simplify Volatility may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Pair Trading with Tema ETF and Simplify Volatility

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

The idea behind Tema ETF Trust and Simplify Volatility Premium 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.