Correlation Between Tidal Trust and IShares GNMA
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and IShares GNMA 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 GNMA 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 GNMA Bond, you can compare the effects of market volatilities on Tidal Trust and IShares GNMA 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 GNMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and IShares GNMA.
Diversification Opportunities for Tidal Trust and IShares GNMA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tidal and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and iShares GNMA Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares GNMA Bond 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 GNMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares GNMA Bond has no effect on the direction of Tidal Trust i.e., Tidal Trust and IShares GNMA go up and down completely randomly.
Pair Corralation between Tidal Trust and IShares GNMA
Given the investment horizon of 90 days Tidal Trust II is expected to generate 2.01 times more return on investment than IShares GNMA. However, Tidal Trust is 2.01 times more volatile than iShares GNMA Bond. It trades about 0.18 of its potential returns per unit of risk. iShares GNMA Bond is currently generating about 0.15 per unit of risk. If you would invest 2,157 in Tidal Trust II on September 1, 2024 and sell it today you would earn a total of 70.00 from holding Tidal Trust II or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tidal Trust II vs. iShares GNMA Bond
Performance |
| Timeline |
| Tidal Trust II |
| iShares GNMA Bond |
Tidal Trust and IShares GNMA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and IShares GNMA
The main advantage of trading using opposite Tidal Trust and IShares GNMA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, IShares GNMA 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 GNMA will offset losses from the drop in IShares GNMA's long position.| Tidal Trust vs. First Trust Exchange Traded | Tidal Trust vs. Ultimus Managers Trust | Tidal Trust vs. Horizon Kinetics Medical | Tidal Trust vs. Harbor Health Care |
| IShares GNMA vs. iShares Agency Bond | IShares GNMA vs. iShares 1 3 Year | IShares GNMA vs. iShares Core 1 5 | IShares GNMA vs. iShares Core 10 |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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