Correlation Between Tidal Trust and T REX
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and T REX 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 T REX 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 T REX 2X Long, you can compare the effects of market volatilities on Tidal Trust and T REX 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 T REX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and T REX.
Diversification Opportunities for Tidal Trust and T REX
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tidal and MSTU is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and T REX 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T REX 2X 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 T REX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T REX 2X has no effect on the direction of Tidal Trust i.e., Tidal Trust and T REX go up and down completely randomly.
Pair Corralation between Tidal Trust and T REX
Given the investment horizon of 90 days Tidal Trust is expected to generate 10.25 times less return on investment than T REX. But when comparing it to its historical volatility, Tidal Trust II is 11.42 times less risky than T REX. It trades about 0.35 of its potential returns per unit of risk. T REX 2X Long is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 6,740 in T REX 2X Long on September 2, 2024 and sell it today you would earn a total of 9,121 from holding T REX 2X Long or generate 135.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tidal Trust II vs. T REX 2X Long
Performance |
| Timeline |
| Tidal Trust II |
| T REX 2X |
Tidal Trust and T REX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and T REX
The main advantage of trading using opposite Tidal Trust and T REX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, T REX 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 T REX will offset losses from the drop in T REX's long position.| Tidal Trust vs. Tidal Trust II | Tidal Trust vs. Direxion Daily META | Tidal Trust vs. Direxion Daily META | Tidal Trust vs. Tidal Trust II |
| T REX vs. Tidal Trust II | T REX vs. Tidal Trust II | T REX vs. Direxion Daily META | T REX vs. Direxion Daily META |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |