Correlation Between Tema Luxury and FLDM

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

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

Diversification Opportunities for Tema Luxury and FLDM

0.0

Correlation Coefficient

Tema Luxury  FLDM

Pay attention - limited upside

The 3 months correlation between Tema and FLDM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tema Luxury ETF and FLDM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLDM and Tema Luxury 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 Tema Luxury ETF are associated (or correlated) with FLDM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLDM has no effect on the direction of Tema Luxury i.e., Tema Luxury and FLDM go up and down completely randomly.

Pair Corralation between Tema Luxury and FLDM

If you would invest (100.00) in FLDM on March 15, 2024 and sell it today you would earn a total of  100.00  from holding FLDM or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Tema Luxury ETF  vs.  FLDM

Tema Luxury ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tema Luxury ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

FLDM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FLDM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, FLDM is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Tema Luxury and FLDM

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

The idea behind Tema Luxury ETF and FLDM 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.