Correlation Between Tidal Trust and IShares Core
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and IShares Core 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 IShares Core 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 iShares Core Aggressive, you can compare the effects of market volatilities on Tidal Trust and IShares Core 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and IShares Core.
Diversification Opportunities for Tidal Trust and IShares Core
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tidal and IShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and iShares Core Aggressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Aggressive 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Aggressive has no effect on the direction of Tidal Trust i.e., Tidal Trust and IShares Core go up and down completely randomly.
Pair Corralation between Tidal Trust and IShares Core
Allowing for the 90-day total investment horizon Tidal Trust is expected to generate 1.34 times less return on investment than IShares Core. But when comparing it to its historical volatility, Tidal Trust II is 1.33 times less risky than IShares Core. It trades about 0.12 of its potential returns per unit of risk. iShares Core Aggressive is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6,484 in iShares Core Aggressive on August 24, 2024 and sell it today you would earn a total of 1,330 from holding iShares Core Aggressive or generate 20.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tidal Trust II vs. iShares Core Aggressive
Performance |
| Timeline |
| Tidal Trust II |
| iShares Core Aggressive |
Tidal Trust and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and IShares Core
The main advantage of trading using opposite Tidal Trust and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.| Tidal Trust vs. Cambria Global Momentum | Tidal Trust vs. Cambria Global Value | Tidal Trust vs. Cambria Foreign Shareholder | Tidal Trust vs. Cambria Trinity ETF |
| IShares Core vs. Cambria Global Momentum | IShares Core vs. Cambria Global Value | IShares Core vs. Cambria Foreign Shareholder | IShares Core vs. Cambria Trinity ETF |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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