Correlation Between Tidal Trust and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and SPDR Dow 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 SPDR Dow 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 SPDR Dow Jones, you can compare the effects of market volatilities on Tidal Trust and SPDR Dow 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 SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and SPDR Dow.
Diversification Opportunities for Tidal Trust and SPDR Dow
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tidal and SPDR is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones 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 SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of Tidal Trust i.e., Tidal Trust and SPDR Dow go up and down completely randomly.
Pair Corralation between Tidal Trust and SPDR Dow
Given the investment horizon of 90 days Tidal Trust is expected to generate 2.4 times less return on investment than SPDR Dow. In addition to that, Tidal Trust is 2.01 times more volatile than SPDR Dow Jones. It trades about 0.05 of its total potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.25 per unit of volatility. If you would invest 42,088 in SPDR Dow Jones on August 26, 2024 and sell it today you would earn a total of 2,228 from holding SPDR Dow Jones or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tidal Trust II vs. SPDR Dow Jones
Performance |
| Timeline |
| Tidal Trust II |
| SPDR Dow Jones |
Tidal Trust and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and SPDR Dow
The main advantage of trading using opposite Tidal Trust and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, SPDR Dow 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 SPDR Dow will offset losses from the drop in SPDR Dow's long position.| Tidal Trust vs. Tidal Trust II | Tidal Trust vs. Tidal Trust II | Tidal Trust vs. First Trust Dorsey | Tidal Trust vs. Direxion Daily META |
| SPDR Dow vs. BlackRock ETF Trust | SPDR Dow vs. Rbb Fund | SPDR Dow vs. Virtus ETF Trust | SPDR Dow vs. Amplify CWP Enhanced |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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