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 Dorsey 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
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Tidal is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey 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 Dorsey 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
Allowing for the 90-day total investment horizon First Trust is expected to generate 2.12 times less return on investment than Tidal Trust. In addition to that, First Trust is 1.11 times more volatile than Tidal Trust II. It trades about 0.17 of its total potential returns per unit of risk. Tidal Trust II is currently generating about 0.41 per unit of volatility. If you would invest 1,688 in Tidal Trust II on August 29, 2024 and sell it today you would earn a total of 177.00 from holding Tidal Trust II or generate 10.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Dorsey vs. Tidal Trust II
Performance |
| Timeline |
| First Trust Dorsey |
| 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 Dorsey | First Trust vs. Invesco DWA Momentum | First Trust vs. First Trust Capital | First Trust vs. First Trust Large |
| Tidal Trust vs. Freedom Day Dividend | Tidal Trust vs. Franklin Templeton ETF | Tidal Trust vs. iShares MSCI China | Tidal Trust vs. Tidal Trust II |
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.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |