Correlation Between IShares Gold and Tema ETF

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

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

Diversification Opportunities for IShares Gold and Tema ETF

-0.75

Correlation Coefficient

IShares Gold  Tema ETF

Pay attention - limited upside

The 3 months correlation between IShares and Tema is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding iShares Gold Trust 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 IShares Gold 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 Gold Trust 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 IShares Gold i.e., IShares Gold and Tema ETF go up and down completely randomly.

Pair Corralation between IShares Gold and Tema ETF

Given the investment horizon of 90 days iShares Gold Trust is expected to generate 0.7 times more return on investment than Tema ETF. However, iShares Gold Trust is 1.43 times less risky than Tema ETF. It trades about 0.18 of its potential returns per unit of risk. Tema ETF Trust is currently generating about -0.06 per unit of risk. If you would invest  2,810  in iShares Gold Trust on February 2, 2025 and sell it today you would earn a total of  415.00  from holding iShares Gold Trust or generate 14.77% return on investment over 90 days.

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

iShares Gold Trust  vs.  Tema ETF Trust

iShares Gold Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Gold Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, IShares Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

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 latest unfluctuating 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.

Pair Trading with IShares Gold and Tema ETF

The main advantage of trading using opposite IShares Gold and Tema ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Gold 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 iShares Gold Trust 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.