Correlation Between Tidal Trust and IShares
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and IShares 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 Tidal Trust and IShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tidal Trust II and IShares, you can compare the effects of market volatilities on Tidal Trust and IShares 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 Tidal Trust with a short position of IShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and IShares.
Diversification Opportunities for Tidal Trust and IShares
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tidal and IShares is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares and Tidal Trust 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 Tidal Trust II are associated (or correlated) with IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of Tidal Trust i.e., Tidal Trust and IShares go up and down completely randomly.
Pair Corralation between Tidal Trust and IShares
Given the investment horizon of 90 days Tidal Trust II is expected to under-perform the IShares. But the etf apears to be less risky and, when comparing its historical volatility, Tidal Trust II is 1.03 times less risky than IShares. The etf trades about -0.04 of its potential returns per unit of risk. The IShares is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,280 in IShares on September 3, 2024 and sell it today you would earn a total of 268.00 from holding IShares or generate 11.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.09% |
| Values | Daily Returns |
Tidal Trust II vs. IShares
Performance |
| Timeline |
| Tidal Trust II |
| IShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tidal Trust and IShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and IShares
The main advantage of trading using opposite Tidal Trust and IShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, IShares 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 IShares will offset losses from the drop in IShares' long position.The idea behind Tidal Trust II and IShares 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.| IShares vs. iShares MSCI Intl | IShares vs. iShares MSCI Intl | IShares vs. iShares Currency Hedged | IShares vs. iShares Edge MSCI |
Check out your portfolio center.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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