Correlation Between First Trust and Tidal ETF
Can any of the company-specific risk be diversified away by investing in both First Trust and Tidal ETF 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 First Trust and Tidal ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Emerging and Tidal ETF Trust, you can compare the effects of market volatilities on First Trust and Tidal ETF 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 First Trust with a short position of Tidal ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Tidal ETF.
Diversification Opportunities for First Trust and Tidal ETF
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Tidal is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Emerging and Tidal ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal ETF Trust and First 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 First Trust Emerging are associated (or correlated) with Tidal ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal ETF Trust has no effect on the direction of First Trust i.e., First Trust and Tidal ETF go up and down completely randomly.
Pair Corralation between First Trust and Tidal ETF
Given the investment horizon of 90 days First Trust Emerging is expected to under-perform the Tidal ETF. But the etf apears to be less risky and, when comparing its historical volatility, First Trust Emerging is 1.3 times less risky than Tidal ETF. The etf trades about -0.07 of its potential returns per unit of risk. The Tidal ETF Trust is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,426 in Tidal ETF Trust on September 1, 2024 and sell it today you would earn a total of 65.00 from holding Tidal ETF Trust or generate 4.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Emerging vs. Tidal ETF Trust
Performance |
| Timeline |
| First Trust Emerging |
| Tidal ETF Trust |
First Trust and Tidal ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Tidal ETF
The main advantage of trading using opposite First Trust and Tidal ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Tidal ETF 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 ETF will offset losses from the drop in Tidal ETF's long position.| First Trust vs. First Trust SSI | First Trust vs. First Trust BuyWrite | First Trust vs. First Trust Managed | First Trust vs. First Trust Tactical |
| Tidal ETF vs. ATAC Rotation ETF | Tidal ETF vs. Atac Inflation Rotation | Tidal ETF vs. JPMorgan Short Duration | Tidal ETF vs. iShares iBonds Dec |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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