Correlation Between Tidal Trust and X Square
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and X Square 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 X Square 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 X Square Balanced, you can compare the effects of market volatilities on Tidal Trust and X Square 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 X Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and X Square.
Diversification Opportunities for Tidal Trust and X Square
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tidal and SQCBX is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and X Square Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Square Balanced 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 X Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Square Balanced has no effect on the direction of Tidal Trust i.e., Tidal Trust and X Square go up and down completely randomly.
Pair Corralation between Tidal Trust and X Square
Given the investment horizon of 90 days Tidal Trust II is expected to generate 6.66 times more return on investment than X Square. However, Tidal Trust is 6.66 times more volatile than X Square Balanced. It trades about 0.05 of its potential returns per unit of risk. X Square Balanced is currently generating about 0.1 per unit of risk. If you would invest 1,858 in Tidal Trust II on August 26, 2024 and sell it today you would earn a total of 710.00 from holding Tidal Trust II or generate 38.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 83.5% |
| Values | Daily Returns |
Tidal Trust II vs. X Square Balanced
Performance |
| Timeline |
| Tidal Trust II |
| X Square Balanced |
Tidal Trust and X Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and X Square
The main advantage of trading using opposite Tidal Trust and X Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, X Square 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 X Square will offset losses from the drop in X Square'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 |
| X Square vs. X Square Balanced | X Square vs. Vanguard SP Mid Cap | X Square vs. SPDR Dow Jones | X Square vs. Energy Select Sector |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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