Correlation Between Volatility Shares and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both Volatility Shares and Tidal Trust 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 Volatility Shares and Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volatility Shares Trust and Tidal Trust II, you can compare the effects of market volatilities on Volatility Shares and Tidal Trust 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 Volatility Shares with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and Tidal Trust.
Diversification Opportunities for Volatility Shares and Tidal Trust
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volatility and Tidal is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II and Volatility Shares 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 Volatility Shares Trust are associated (or correlated) with Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of Volatility Shares i.e., Volatility Shares and Tidal Trust go up and down completely randomly.
Pair Corralation between Volatility Shares and Tidal Trust
Given the investment horizon of 90 days Volatility Shares Trust is expected to generate 2.22 times more return on investment than Tidal Trust. However, Volatility Shares is 2.22 times more volatile than Tidal Trust II. It trades about 0.07 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.11 per unit of risk. If you would invest 3,755 in Volatility Shares Trust on September 1, 2024 and sell it today you would earn a total of 2,265 from holding Volatility Shares Trust or generate 60.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.4% |
| Values | Daily Returns |
Volatility Shares Trust vs. Tidal Trust II
Performance |
| Timeline |
| Volatility Shares Trust |
| Tidal Trust II |
Volatility Shares and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volatility Shares and Tidal Trust
The main advantage of trading using opposite Volatility Shares and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares position performs unexpectedly, Tidal Trust 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 Tidal Trust will offset losses from the drop in Tidal Trust's long position.| Volatility Shares vs. ProShares Trust | Volatility Shares vs. iShares Ethereum Trust | Volatility Shares vs. ProShares Trust | Volatility Shares vs. Grayscale Ethereum Trust |
| Tidal Trust vs. Global X SP | Tidal Trust vs. Amplify CWP Enhanced | Tidal Trust vs. JPMorgan Equity Premium |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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