Correlation Between SPDR SP and Tema Cardiovascular

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

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

Diversification Opportunities for SPDR SP and Tema Cardiovascular

0.14

Correlation Coefficient

SPDR SP  Tema Cardiovascular

Average diversification

The 3 months correlation between SPDR and Tema is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Biotech 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 SPDR SP 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 SPDR SP Biotech 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 SPDR SP i.e., SPDR SP and Tema Cardiovascular go up and down completely randomly.

Pair Corralation between SPDR SP and Tema Cardiovascular

Considering the 90-day investment horizon SPDR SP Biotech is expected to under-perform the Tema Cardiovascular. In addition to that, SPDR SP is 1.53 times more volatile than Tema Cardiovascular and. It trades about -0.07 of its total potential returns per unit of risk. Tema Cardiovascular and is currently generating about 0.01 per unit of volatility. If you would invest  2,945  in Tema Cardiovascular and on December 27, 2024 and sell it today you would earn a total of  6.00  from holding Tema Cardiovascular and or generate 0.2% return on investment over 90 days.

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

SPDR SP Biotech  vs.  Tema Cardiovascular and

SPDR SP Biotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SP Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Tema Cardiovascular and

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tema Cardiovascular and has generated negative risk-adjusted returns adding no value to investors with long positions. 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 SPDR SP and Tema Cardiovascular

The main advantage of trading using opposite SPDR SP and Tema Cardiovascular positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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 SPDR SP Biotech 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.