Correlation Between Tidal Trust and SPDR SSgA
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and SPDR SSgA 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 SPDR SSgA 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 SPDR SSgA Global, you can compare the effects of market volatilities on Tidal Trust and SPDR SSgA 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 SPDR SSgA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and SPDR SSgA.
Diversification Opportunities for Tidal Trust and SPDR SSgA
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tidal and SPDR is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and SPDR SSgA Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Global 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 SPDR SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSgA Global has no effect on the direction of Tidal Trust i.e., Tidal Trust and SPDR SSgA go up and down completely randomly.
Pair Corralation between Tidal Trust and SPDR SSgA
Allowing for the 90-day total investment horizon Tidal Trust is expected to generate 1.62 times less return on investment than SPDR SSgA. But when comparing it to its historical volatility, Tidal Trust II is 1.43 times less risky than SPDR SSgA. It trades about 0.08 of its potential returns per unit of risk. SPDR SSgA Global is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,279 in SPDR SSgA Global on August 30, 2024 and sell it today you would earn a total of 263.00 from holding SPDR SSgA Global or generate 6.15% 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. SPDR SSgA Global
Performance |
| Timeline |
| Tidal Trust II |
| SPDR SSgA Global |
Tidal Trust and SPDR SSgA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and SPDR SSgA
The main advantage of trading using opposite Tidal Trust and SPDR SSgA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, SPDR SSgA 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 SPDR SSgA will offset losses from the drop in SPDR SSgA's long position.| Tidal Trust vs. ProShares Merger ETF | Tidal Trust vs. Even Herd Long | Tidal Trust vs. Simplify Exchange Traded | Tidal Trust vs. Tuttle Capital Shareholders |
| SPDR SSgA vs. SPDR SSgA Income | SPDR SSgA vs. SPDR SSgA Multi Asset | SPDR SSgA vs. SPDR Bloomberg International | SPDR SSgA vs. SPDR Bloomberg Emerging |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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