Correlation Between Tidal Trust and Pacer Benchmark
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and Pacer Benchmark 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 Pacer Benchmark 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 Pacer Benchmark Industrial, you can compare the effects of market volatilities on Tidal Trust and Pacer Benchmark 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 Pacer Benchmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and Pacer Benchmark.
Diversification Opportunities for Tidal Trust and Pacer Benchmark
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tidal and Pacer is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and Pacer Benchmark Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Benchmark Indu 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 Pacer Benchmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Benchmark Indu has no effect on the direction of Tidal Trust i.e., Tidal Trust and Pacer Benchmark go up and down completely randomly.
Pair Corralation between Tidal Trust and Pacer Benchmark
Given the investment horizon of 90 days Tidal Trust II is expected to generate 0.82 times more return on investment than Pacer Benchmark. However, Tidal Trust II is 1.22 times less risky than Pacer Benchmark. It trades about 0.07 of its potential returns per unit of risk. Pacer Benchmark Industrial is currently generating about 0.02 per unit of risk. If you would invest 1,945 in Tidal Trust II on August 30, 2024 and sell it today you would earn a total of 282.00 from holding Tidal Trust II or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 43.23% |
| Values | Daily Returns |
Tidal Trust II vs. Pacer Benchmark Industrial
Performance |
| Timeline |
| Tidal Trust II |
| Pacer Benchmark Indu |
Tidal Trust and Pacer Benchmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and Pacer Benchmark
The main advantage of trading using opposite Tidal Trust and Pacer Benchmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, Pacer Benchmark 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 Pacer Benchmark will offset losses from the drop in Pacer Benchmark'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 |
| Pacer Benchmark vs. Pacer Benchmark Data | Pacer Benchmark vs. US Diversified Real | Pacer Benchmark vs. Nuveen Short Term REIT |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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