Correlation Between Tidal Trust and ETF Series

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Can any of the company-specific risk be diversified away by investing in both Tidal Trust and ETF Series 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 ETF Series 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 ETF Series Solutions, you can compare the effects of market volatilities on Tidal Trust and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and ETF Series.

Diversification Opportunities for Tidal Trust and ETF Series

-0.94
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Tidal and ETF is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Tidal Trust i.e., Tidal Trust and ETF Series go up and down completely randomly.

Pair Corralation between Tidal Trust and ETF Series

Given the investment horizon of 90 days Tidal Trust II is expected to generate 102.33 times more return on investment than ETF Series. However, Tidal Trust is 102.33 times more volatile than ETF Series Solutions. It trades about 0.1 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.05 per unit of risk. If you would invest  0.00  in Tidal Trust II on September 14, 2024 and sell it today you would earn a total of  1,313  from holding Tidal Trust II or generate 9.223372036854776E16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy43.16%
ValuesDaily Returns

Tidal Trust II  vs.  ETF Series Solutions

 Performance 
       Timeline  
Tidal Trust II 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tidal Trust II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.
ETF Series Solutions 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in ETF Series Solutions are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, ETF Series may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tidal Trust and ETF Series Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tidal Trust and ETF Series

The main advantage of trading using opposite Tidal Trust and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.
The idea behind Tidal Trust II and ETF Series Solutions 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.
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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