Correlation Between Alphabet and Tema ETF

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

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

Diversification Opportunities for Alphabet and Tema ETF

0.14

Correlation Coefficient

Alphabet  Tema ETF

Average diversification

The 3 months correlation between Alphabet and Tema is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C 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 Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Tema ETF go up and down completely randomly.

Pair Corralation between Alphabet and Tema ETF

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the Tema ETF. In addition to that, Alphabet is 1.81 times more volatile than Tema ETF Trust. It trades about -0.13 of its total potential returns per unit of risk. Tema ETF Trust is currently generating about -0.04 per unit of volatility. If you would invest  2,218  in Tema ETF Trust on December 27, 2024 and sell it today you would lose (61.00) from holding Tema ETF Trust or give up 2.75% of portfolio value over 90 days.

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

Alphabet Inc Class C  vs.  Tema ETF Trust

Alphabet Class C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Tema ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tema ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Tema ETF is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alphabet and Tema ETF

The main advantage of trading using opposite Alphabet and Tema ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class C 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.