Correlation Between Tidal Trust and SHP ETF
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and SHP ETF 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 SHP ETF 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 SHP ETF Trust, you can compare the effects of market volatilities on Tidal Trust and SHP ETF 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 SHP ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and SHP ETF.
Diversification Opportunities for Tidal Trust and SHP ETF
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tidal and SHP is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP ETF 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 SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of Tidal Trust i.e., Tidal Trust and SHP ETF go up and down completely randomly.
Pair Corralation between Tidal Trust and SHP ETF
Given the investment horizon of 90 days Tidal Trust II is expected to generate 44.32 times more return on investment than SHP ETF. However, Tidal Trust is 44.32 times more volatile than SHP ETF Trust. It trades about 0.02 of its potential returns per unit of risk. SHP ETF Trust is currently generating about 0.36 per unit of risk. If you would invest 1,421 in Tidal Trust II on August 26, 2024 and sell it today you would earn a total of 146.00 from holding Tidal Trust II or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tidal Trust II vs. SHP ETF Trust
Performance |
| Timeline |
| Tidal Trust II |
| SHP ETF Trust |
Tidal Trust and SHP ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and SHP ETF
The main advantage of trading using opposite Tidal Trust and SHP ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, SHP ETF 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 SHP ETF will offset losses from the drop in SHP ETF's long position.| Tidal Trust vs. First Trust BuyWrite | Tidal Trust vs. Amplify CWP Enhanced | Tidal Trust vs. ProShares SP MidCap |
| SHP ETF vs. First Trust Low | SHP ETF vs. First Trust Senior | SHP ETF vs. First Trust TCW | SHP ETF vs. First Trust Tactical |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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