Correlation Between Tidal Trust and ETF Series
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
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tidal and ETF is 0.04. 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 0.98 times more return on investment than ETF Series. However, Tidal Trust II is 1.02 times less risky than ETF Series. It trades about 0.09 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.07 per unit of risk. If you would invest 1,784 in Tidal Trust II on September 3, 2024 and sell it today you would earn a total of 169.00 from holding Tidal Trust II or generate 9.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tidal Trust II vs. ETF Series Solutions
Performance |
| Timeline |
| Tidal Trust II |
| ETF Series Solutions |
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.| Tidal Trust vs. USCF Midstream Energy | Tidal Trust vs. EA Series Trust | Tidal Trust vs. WisdomTree Floating Rate | Tidal Trust vs. Fairlead Tactical Sector |
| ETF Series vs. Global X Funds | ETF Series vs. US Treasury 12 | ETF Series vs. Tidal Trust II | ETF Series vs. Franklin Liberty Treasury |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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