Correlation Between Tidal Trust and MFUT
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and MFUT 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 MFUT 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 MFUT, you can compare the effects of market volatilities on Tidal Trust and MFUT 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 MFUT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and MFUT.
Diversification Opportunities for Tidal Trust and MFUT
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tidal and MFUT is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and MFUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFUT 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 MFUT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFUT has no effect on the direction of Tidal Trust i.e., Tidal Trust and MFUT go up and down completely randomly.
Pair Corralation between Tidal Trust and MFUT
Given the investment horizon of 90 days Tidal Trust II is expected to under-perform the MFUT. In addition to that, Tidal Trust is 2.82 times more volatile than MFUT. It trades about -0.01 of its total potential returns per unit of risk. MFUT is currently generating about -0.02 per unit of volatility. If you would invest 1,688 in MFUT on August 29, 2024 and sell it today you would lose (4.00) from holding MFUT or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tidal Trust II vs. MFUT
Performance |
| Timeline |
| Tidal Trust II |
| MFUT |
Tidal Trust and MFUT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and MFUT
The main advantage of trading using opposite Tidal Trust and MFUT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, MFUT 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 MFUT will offset losses from the drop in MFUT's long position.| Tidal Trust vs. Vanguard Total Stock | Tidal Trust vs. SPDR SP 500 | Tidal Trust vs. iShares Core SP | Tidal Trust vs. Vanguard Total Bond |
| MFUT vs. Freedom Day Dividend | MFUT vs. Franklin Templeton ETF | MFUT vs. iShares MSCI China | MFUT 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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