Correlation Between SPDR SP and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and Tidal Trust II, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Tidal Trust.
Diversification Opportunities for SPDR SP and Tidal Trust
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and Tidal is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 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 SPDR SP 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 SPDR SP 500 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 SPDR SP i.e., SPDR SP and Tidal Trust go up and down completely randomly.
Pair Corralation between SPDR SP and Tidal Trust
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 0.61 times more return on investment than Tidal Trust. However, SPDR SP 500 is 1.63 times less risky than Tidal Trust. It trades about 0.15 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.04 per unit of risk. If you would invest 44,886 in SPDR SP 500 on August 24, 2024 and sell it today you would earn a total of 14,481 from holding SPDR SP 500 or generate 32.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. Tidal Trust II
Performance |
| Timeline |
| SPDR SP 500 |
| Tidal Trust II |
SPDR SP and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Tidal Trust
The main advantage of trading using opposite SPDR SP and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| SPDR SP vs. SPDR Gold Shares | SPDR SP vs. Vanguard Real Estate | SPDR SP vs. Vanguard Total Stock | SPDR SP vs. Vanguard FTSE Emerging |
| Tidal Trust vs. Franklin Templeton ETF | Tidal Trust vs. Tidal Trust II | Tidal Trust vs. iShares Dividend and | Tidal Trust vs. Altrius Global Dividend |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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