Correlation Between IShares Global and Tema Cardiovascular

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

By analyzing existing cross correlation between iShares Global Healthcare and Tema Cardiovascular and, you can compare the effects of market volatilities on IShares Global and Tema Cardiovascular 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 IShares Global with a short position of Tema Cardiovascular. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Tema Cardiovascular.

Diversification Opportunities for IShares Global and Tema Cardiovascular

0.85

Correlation Coefficient

IShares Global  Tema Cardiovascular

Very poor diversification

The 3 months correlation between IShares and Tema is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and Tema Cardiovascular and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tema Cardiovascular and and IShares Global 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 iShares Global Healthcare are associated (or correlated) with Tema Cardiovascular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tema Cardiovascular and has no effect on the direction of IShares Global i.e., IShares Global and Tema Cardiovascular go up and down completely randomly.

Pair Corralation between IShares Global and Tema Cardiovascular

Considering the 90-day investment horizon iShares Global Healthcare is expected to generate 0.85 times more return on investment than Tema Cardiovascular. However, iShares Global Healthcare is 1.18 times less risky than Tema Cardiovascular. It trades about 0.13 of its potential returns per unit of risk. Tema Cardiovascular and is currently generating about 0.03 per unit of risk. If you would invest  8,576  in iShares Global Healthcare on December 28, 2024 and sell it today you would earn a total of  513.00  from holding iShares Global Healthcare or generate 5.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

iShares Global Healthcare  vs.  Tema Cardiovascular and

iShares Global Healthcare

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Healthcare are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, IShares Global is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Tema Cardiovascular and

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tema Cardiovascular and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Tema Cardiovascular is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Global and Tema Cardiovascular

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

The idea behind iShares Global Healthcare and Tema Cardiovascular and 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.