Correlation Between First Trust and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both First Trust and Tidal Trust 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 Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust BuyWrite and Tidal Trust II, you can compare the effects of market volatilities on First Trust and Tidal Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Tidal Trust.
Diversification Opportunities for First Trust and Tidal Trust
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Tidal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding First Trust BuyWrite and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II 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 BuyWrite are associated (or correlated) with Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of First Trust i.e., First Trust and Tidal Trust go up and down completely randomly.
Pair Corralation between First Trust and Tidal Trust
Given the investment horizon of 90 days First Trust is expected to generate 9.01 times less return on investment than Tidal Trust. But when comparing it to its historical volatility, First Trust BuyWrite is 5.38 times less risky than Tidal Trust. It trades about 0.19 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,246 in Tidal Trust II on August 26, 2024 and sell it today you would earn a total of 321.00 from holding Tidal Trust II or generate 25.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust BuyWrite vs. Tidal Trust II
Performance |
| Timeline |
| First Trust BuyWrite |
| Tidal Trust II |
First Trust and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Tidal Trust
The main advantage of trading using opposite First Trust and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Tidal Trust 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 Trust will offset losses from the drop in Tidal Trust's long position.| First Trust vs. First Trust Emerging | First Trust vs. First Trust Managed | First Trust vs. First Trust Senior | First Trust vs. First Trust Income |
| Tidal Trust vs. Global X SP | Tidal Trust vs. First Trust BuyWrite | Tidal Trust vs. Amplify CWP Enhanced | Tidal Trust vs. ProShares SP MidCap |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |