Correlation Between ETRACS 2x and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both ETRACS 2x 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 ETRACS 2x and Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS 2x Leveraged and Tidal Trust II, you can compare the effects of market volatilities on ETRACS 2x 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 ETRACS 2x with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2x and Tidal Trust.
Diversification Opportunities for ETRACS 2x and Tidal Trust
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ETRACS and Tidal is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2x Leveraged 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 ETRACS 2x 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 ETRACS 2x Leveraged 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 ETRACS 2x i.e., ETRACS 2x and Tidal Trust go up and down completely randomly.
Pair Corralation between ETRACS 2x and Tidal Trust
Given the investment horizon of 90 days ETRACS 2x Leveraged is expected to generate 0.83 times more return on investment than Tidal Trust. However, ETRACS 2x Leveraged is 1.2 times less risky than Tidal Trust. It trades about 0.24 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.02 per unit of risk. If you would invest 4,054 in ETRACS 2x Leveraged on August 30, 2024 and sell it today you would earn a total of 289.00 from holding ETRACS 2x Leveraged or generate 7.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS 2x Leveraged vs. Tidal Trust II
Performance |
| Timeline |
| ETRACS 2x Leveraged |
| Tidal Trust II |
ETRACS 2x and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS 2x and Tidal Trust
The main advantage of trading using opposite ETRACS 2x and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2x 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.| ETRACS 2x vs. Freedom Day Dividend | ETRACS 2x vs. Franklin Templeton ETF | ETRACS 2x vs. iShares MSCI China | ETRACS 2x vs. Tidal Trust II |
| Tidal Trust vs. Vanguard Total Stock | Tidal Trust vs. SPDR SP 500 | Tidal Trust vs. iShares Core SP | Tidal Trust vs. Vanguard Total Bond |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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