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 LongShort 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
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Tidal is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Trust LongShort 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 LongShort 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 LongShort is expected to generate 0.82 times more return on investment than Tidal ETF. However, First Trust LongShort is 1.22 times less risky than Tidal ETF. It trades about 0.21 of its potential returns per unit of risk. Tidal ETF Trust is currently generating about -0.04 per unit of risk. If you would invest 6,415 in First Trust LongShort on August 26, 2024 and sell it today you would earn a total of 148.00 from holding First Trust LongShort or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust LongShort vs. Tidal ETF Trust
Performance |
| Timeline |
| First Trust LongShort |
| 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 Managed | First Trust vs. IQ Hedge Multi Strategy | First Trust vs. First Trust BuyWrite | First Trust vs. SPDR SSgA Global |
| Tidal ETF vs. KFA Mount Lucas | Tidal ETF vs. AGFiQ Market Neutral | Tidal ETF vs. iMGP DBi Managed | Tidal ETF vs. First Trust LongShort |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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