Correlation Between Ford and Tema ETF

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

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

Diversification Opportunities for Ford and Tema ETF

-0.5

Correlation Coefficient

Ford  Tema ETF

Very good diversification

The 3 months correlation between Ford and Tema is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and Tema ETF go up and down completely randomly.

Pair Corralation between Ford and Tema ETF

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Tema ETF. In addition to that, Ford is 2.05 times more volatile than Tema ETF Trust. It trades about -0.04 of its total potential returns per unit of risk. Tema ETF Trust is currently generating about 0.01 per unit of volatility. If you would invest  2,369  in Tema ETF Trust on December 2, 2024 and sell it today you would earn a total of  1.00  from holding Tema ETF Trust or generate 0.04% return on investment over 90 days.

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

Ford Motor  vs.  Tema ETF Trust

Ford Motor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Tema ETF Trust

Risk-Adjusted Performance

OK

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 unfluctuating basic indicators, Tema ETF may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ford and Tema ETF

The main advantage of trading using opposite Ford and Tema ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.

The idea behind Ford Motor and Tema ETF Trust 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.