Correlation Between KraneShares Trust and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both KraneShares Trust and Tidal Trust 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 KraneShares Trust and Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KraneShares Trust and Tidal Trust II, you can compare the effects of market volatilities on KraneShares Trust and Tidal Trust 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 KraneShares Trust with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of KraneShares Trust and Tidal Trust.
Diversification Opportunities for KraneShares Trust and Tidal Trust
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between KraneShares and Tidal is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares Trust and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II and KraneShares 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 KraneShares Trust are associated (or correlated) with Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of KraneShares Trust i.e., KraneShares Trust and Tidal Trust go up and down completely randomly.
Pair Corralation between KraneShares Trust and Tidal Trust
Given the investment horizon of 90 days KraneShares Trust is expected to under-perform the Tidal Trust. But the etf apears to be less risky and, when comparing its historical volatility, KraneShares Trust is 2.8 times less risky than Tidal Trust. The etf trades about -0.01 of its potential returns per unit of risk. The Tidal Trust II is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 972.00 in Tidal Trust II on September 1, 2024 and sell it today you would earn a total of 472.00 from holding Tidal Trust II or generate 48.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
KraneShares Trust vs. Tidal Trust II
Performance |
| Timeline |
| KraneShares Trust |
| Tidal Trust II |
KraneShares Trust and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KraneShares Trust and Tidal Trust
The main advantage of trading using opposite KraneShares Trust and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares Trust position performs unexpectedly, Tidal Trust 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 Tidal Trust will offset losses from the drop in Tidal Trust's long position.| KraneShares Trust vs. Xtrackers Harvest CSI | KraneShares Trust vs. Aquagold International | KraneShares Trust vs. Thrivent High Yield | KraneShares Trust vs. Morningstar Unconstrained Allocation |
| Tidal Trust vs. Tidal Trust II | Tidal Trust vs. Simplify Volatility Premium | Tidal Trust vs. Tidal Trust II | Tidal Trust vs. Tidal Trust II |
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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