Correlation Between First Trust and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust TCW and Tidal Trust II, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Tidal Trust.
Diversification Opportunities for First Trust and Tidal Trust
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Tidal is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding First Trust TCW 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 First 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 First Trust TCW 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 First Trust i.e., First Trust and Tidal Trust go up and down completely randomly.
Pair Corralation between First Trust and Tidal Trust
Given the investment horizon of 90 days First Trust is expected to generate 18.3 times less return on investment than Tidal Trust. But when comparing it to its historical volatility, First Trust TCW is 1.9 times less risky than Tidal Trust. It trades about 0.01 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,932 in Tidal Trust II on August 29, 2024 and sell it today you would earn a total of 16.00 from holding Tidal Trust II or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Trust TCW vs. Tidal Trust II
Performance |
| Timeline |
| First Trust TCW |
| Tidal Trust II |
First Trust and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Tidal Trust
The main advantage of trading using opposite First Trust and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust TCW | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Senior |
| Tidal Trust vs. USCF Midstream Energy | Tidal Trust vs. EA Series Trust | Tidal Trust vs. WisdomTree Floating Rate | Tidal Trust vs. Fairlead Tactical 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |