Correlation Between Tidal Trust and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and IShares 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 Tidal Trust and IShares Trust 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 iShares Trust, you can compare the effects of market volatilities on Tidal Trust and IShares 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 Tidal Trust with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and IShares Trust.
Diversification Opportunities for Tidal Trust and IShares Trust
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Tidal and IShares is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Tidal Trust i.e., Tidal Trust and IShares Trust go up and down completely randomly.
Pair Corralation between Tidal Trust and IShares Trust
Considering the 90-day investment horizon Tidal Trust is expected to generate 30.76 times less return on investment than IShares Trust. But when comparing it to its historical volatility, Tidal Trust II is 36.86 times less risky than IShares Trust. It trades about 0.11 of its potential returns per unit of risk. iShares Trust is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.00 in iShares Trust on August 27, 2024 and sell it today you would earn a total of 2,520 from holding iShares Trust or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 45.42% |
| Values | Daily Returns |
Tidal Trust II vs. iShares Trust
Performance |
| Timeline |
| Tidal Trust II |
| iShares Trust |
Tidal Trust and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and IShares Trust
The main advantage of trading using opposite Tidal Trust and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, IShares 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 IShares Trust will offset losses from the drop in IShares Trust's long position.The idea behind Tidal Trust II and iShares Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IShares Trust vs. Vanguard Short Term Inflation Protected | IShares Trust vs. iShares TIPS Bond | IShares Trust vs. Invesco PureBeta 0 5 | IShares Trust vs. Goldman Sachs Access |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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