Correlation Between Tidal Trust and E Mini
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and E Mini 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 E Mini 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 E Mini SP 500, you can compare the effects of market volatilities on Tidal Trust and E Mini 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 E Mini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and E Mini.
Diversification Opportunities for Tidal Trust and E Mini
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tidal and ESUSD is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and E Mini SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Mini SP 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 E Mini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Mini SP has no effect on the direction of Tidal Trust i.e., Tidal Trust and E Mini go up and down completely randomly.
Pair Corralation between Tidal Trust and E Mini
Given the investment horizon of 90 days Tidal Trust is expected to generate 1.17 times less return on investment than E Mini. In addition to that, Tidal Trust is 1.49 times more volatile than E Mini SP 500. It trades about 0.06 of its total potential returns per unit of risk. E Mini SP 500 is currently generating about 0.1 per unit of volatility. If you would invest 400,325 in E Mini SP 500 on August 26, 2024 and sell it today you would earn a total of 198,375 from holding E Mini SP 500 or generate 49.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 61.84% |
| Values | Daily Returns |
Tidal Trust II vs. E Mini SP 500
Performance |
| Timeline |
| Tidal Trust II |
| E Mini SP |
Tidal Trust and E Mini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and E Mini
The main advantage of trading using opposite Tidal Trust and E Mini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, E Mini 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 E Mini will offset losses from the drop in E Mini's long position.| Tidal Trust vs. First Trust BuyWrite | Tidal Trust vs. Amplify CWP Enhanced | Tidal Trust vs. ProShares SP MidCap |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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