Correlation Between IShares Global and Tema Neuroscience

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

Diversification Opportunities for IShares Global and Tema Neuroscience

0.68

Correlation Coefficient

IShares Global  Tema Neuroscience

Poor diversification

The 3 months correlation between IShares and Tema is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and Tema Neuroscience and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tema Neuroscience 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 Neuroscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tema Neuroscience has no effect on the direction of IShares Global i.e., IShares Global and Tema Neuroscience go up and down completely randomly.

Pair Corralation between IShares Global and Tema Neuroscience

Considering the 90-day investment horizon iShares Global Healthcare is expected to under-perform the Tema Neuroscience. But the etf apears to be less risky and, when comparing its historical volatility, iShares Global Healthcare is 1.72 times less risky than Tema Neuroscience. The etf trades about -0.2 of its potential returns per unit of risk. The Tema Neuroscience and is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,678  in Tema Neuroscience and on September 2, 2024 and sell it today you would lose (60.00) from holding Tema Neuroscience and or give up 2.24% of portfolio value over 90 days.

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

iShares Global Healthcare  vs.  Tema Neuroscience and

iShares Global Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Etf's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the ETF firm stakeholders.

Tema Neuroscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tema Neuroscience and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Tema Neuroscience is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares Global and Tema Neuroscience

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

The idea behind iShares Global Healthcare and Tema Neuroscience 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.