Correlation Between Tidal Trust and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and ProShares UltraShort 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 ProShares UltraShort 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 ProShares UltraShort Euro, you can compare the effects of market volatilities on Tidal Trust and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and ProShares UltraShort.
Diversification Opportunities for Tidal Trust and ProShares UltraShort
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tidal and ProShares is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and ProShares UltraShort Euro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort Euro 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort Euro has no effect on the direction of Tidal Trust i.e., Tidal Trust and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Tidal Trust and ProShares UltraShort
Given the investment horizon of 90 days Tidal Trust is expected to generate 9.26 times less return on investment than ProShares UltraShort. But when comparing it to its historical volatility, Tidal Trust II is 1.51 times less risky than ProShares UltraShort. It trades about 0.04 of its potential returns per unit of risk. ProShares UltraShort Euro is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,149 in ProShares UltraShort Euro on September 5, 2024 and sell it today you would earn a total of 240.00 from holding ProShares UltraShort Euro or generate 7.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tidal Trust II vs. ProShares UltraShort Euro
Performance |
| Timeline |
| Tidal Trust II |
| ProShares UltraShort Euro |
Tidal Trust and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and ProShares UltraShort
The main advantage of trading using opposite Tidal Trust and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.| Tidal Trust vs. Realty Income | Tidal Trust vs. First Industrial Realty | Tidal Trust vs. Healthcare Realty Trust | Tidal Trust vs. Park Hotels Resorts |
| ProShares UltraShort vs. ProShares UltraShort Yen | ProShares UltraShort vs. ProShares Ultra Euro | ProShares UltraShort vs. ProShares UltraShort FTSE | ProShares UltraShort vs. ProShares UltraShort Gold |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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