Correlation Between SHP ETF and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both SHP ETF 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 SHP ETF and Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHP ETF Trust and Tidal Trust II, you can compare the effects of market volatilities on SHP ETF 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 SHP ETF with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHP ETF and Tidal Trust.
Diversification Opportunities for SHP ETF and Tidal Trust
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SHP and Tidal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SHP ETF 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 SHP ETF 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 SHP ETF 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 SHP ETF i.e., SHP ETF and Tidal Trust go up and down completely randomly.
Pair Corralation between SHP ETF and Tidal Trust
Given the investment horizon of 90 days SHP ETF is expected to generate 38.79 times less return on investment than Tidal Trust. But when comparing it to its historical volatility, SHP ETF Trust is 118.39 times less risky than Tidal Trust. It trades about 0.85 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,231 in Tidal Trust II on August 29, 2024 and sell it today you would earn a total of 291.00 from holding Tidal Trust II or generate 23.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHP ETF Trust vs. Tidal Trust II
Performance |
| Timeline |
| SHP ETF Trust |
| Tidal Trust II |
SHP ETF and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHP ETF and Tidal Trust
The main advantage of trading using opposite SHP ETF and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHP ETF 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.| SHP ETF vs. SHP ETF Trust | SHP ETF vs. SHP ETF Trust | SHP ETF vs. iShares Trust | SHP ETF vs. VanEck ETF Trust |
| Tidal Trust vs. Tidal Trust II | Tidal Trust vs. Simplify Volatility Premium | Tidal Trust vs. Tidal Trust II | Tidal Trust vs. Tidal Trust II |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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