Correlation Between Northern Lights and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both Northern Lights 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 Northern Lights and Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Tidal Trust II, you can compare the effects of market volatilities on Northern Lights 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 Northern Lights with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Tidal Trust.
Diversification Opportunities for Northern Lights and Tidal Trust
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northern and Tidal is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights 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 Northern Lights 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 Northern Lights 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 Northern Lights i.e., Northern Lights and Tidal Trust go up and down completely randomly.
Pair Corralation between Northern Lights and Tidal Trust
Given the investment horizon of 90 days Northern Lights is expected to generate 1.32 times more return on investment than Tidal Trust. However, Northern Lights is 1.32 times more volatile than Tidal Trust II. It trades about 0.07 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.22 per unit of risk. If you would invest 2,910 in Northern Lights on August 29, 2024 and sell it today you would earn a total of 11.00 from holding Northern Lights or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Tidal Trust II
Performance |
| Timeline |
| Northern Lights |
| Tidal Trust II |
Northern Lights and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Tidal Trust
The main advantage of trading using opposite Northern Lights and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights 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.| Northern Lights vs. Tidal Trust II | Northern Lights vs. ProShares Merger ETF | Northern Lights vs. Even Herd Long | Northern Lights vs. Simplify Exchange Traded |
| Tidal Trust vs. iShares Core Aggressive | Tidal Trust vs. SPDR SSgA Multi Asset | Tidal Trust vs. SPDR SSgA Global | Tidal Trust vs. WisdomTree International Efficient |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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