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 Yen, 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
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tidal and ProShares is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and ProShares UltraShort Yen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort Yen 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 Yen 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 II is expected to generate 0.63 times more return on investment than ProShares UltraShort. However, Tidal Trust II is 1.59 times less risky than ProShares UltraShort. It trades about -0.04 of its potential returns per unit of risk. ProShares UltraShort Yen is currently generating about -0.14 per unit of risk. If you would invest 3,211 in Tidal Trust II on September 14, 2024 and sell it today you would lose (22.00) from holding Tidal Trust II or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tidal Trust II vs. ProShares UltraShort Yen
Performance |
| Timeline |
| Tidal Trust II |
| ProShares UltraShort Yen |
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. ProShares UltraShort Yen | Tidal Trust vs. ProShares Ultra Telecommunications | Tidal Trust vs. ProShares Ultra Consumer | Tidal Trust vs. ProShares Ultra Consumer |
| ProShares UltraShort vs. ProShares UltraShort Euro | ProShares UltraShort vs. ProShares Ultra Yen | ProShares UltraShort vs. ProShares Ultra Euro | ProShares UltraShort vs. ProShares UltraShort MSCI |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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