Correlation Between First Trust and Tidal ETF
Can any of the company-specific risk be diversified away by investing in both First Trust and Tidal ETF 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 First Trust and Tidal ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Low and Tidal ETF Trust, you can compare the effects of market volatilities on First Trust and Tidal ETF 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 First Trust with a short position of Tidal ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Tidal ETF.
Diversification Opportunities for First Trust and Tidal ETF
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Tidal is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Low and Tidal ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal ETF Trust and First 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 First Trust Low are associated (or correlated) with Tidal ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal ETF Trust has no effect on the direction of First Trust i.e., First Trust and Tidal ETF go up and down completely randomly.
Pair Corralation between First Trust and Tidal ETF
Given the investment horizon of 90 days First Trust is expected to generate 3.69 times less return on investment than Tidal ETF. In addition to that, First Trust is 1.15 times more volatile than Tidal ETF Trust. It trades about 0.16 of its total potential returns per unit of risk. Tidal ETF Trust is currently generating about 0.68 per unit of volatility. If you would invest 1,859 in Tidal ETF Trust on September 1, 2024 and sell it today you would earn a total of 51.00 from holding Tidal ETF Trust or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Trust Low vs. Tidal ETF Trust
Performance |
| Timeline |
| First Trust Low |
| Tidal ETF Trust |
First Trust and Tidal ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Tidal ETF
The main advantage of trading using opposite First Trust and Tidal ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Tidal ETF 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 ETF will offset losses from the drop in Tidal ETF's long position.| First Trust vs. FlexShares Disciplined Duration | First Trust vs. Vanguard Mortgage Backed Securities | First Trust vs. Simplify Exchange Traded | First Trust vs. WisdomTree Mortgage Plus |
| Tidal ETF vs. SPDR Barclays Long | Tidal ETF vs. SPDR Portfolio Intermediate | Tidal ETF vs. SPDR Barclays Short | Tidal ETF vs. SPDR Barclays Intermediate |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |