Correlation Between Tidal Trust and Freedom Day
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and Freedom Day 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 Freedom Day 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 Freedom Day Dividend, you can compare the effects of market volatilities on Tidal Trust and Freedom Day 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 Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and Freedom Day.
Diversification Opportunities for Tidal Trust and Freedom Day
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tidal and Freedom is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend 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 Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of Tidal Trust i.e., Tidal Trust and Freedom Day go up and down completely randomly.
Pair Corralation between Tidal Trust and Freedom Day
Given the investment horizon of 90 days Tidal Trust is expected to generate 1.73 times less return on investment than Freedom Day. But when comparing it to its historical volatility, Tidal Trust II is 1.96 times less risky than Freedom Day. It trades about 0.13 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,126 in Freedom Day Dividend on September 1, 2024 and sell it today you would earn a total of 406.00 from holding Freedom Day Dividend or generate 12.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Tidal Trust II vs. Freedom Day Dividend
Performance |
| Timeline |
| Tidal Trust II |
| Freedom Day Dividend |
Tidal Trust and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and Freedom Day
The main advantage of trading using opposite Tidal Trust and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day's long position.| Tidal Trust vs. FT Vest Equity | Tidal Trust vs. Northern Lights | Tidal Trust vs. Dimensional International High | Tidal Trust vs. Matthews China Discovery |
| Freedom Day vs. iShares Core SP | Freedom Day vs. iShares Core MSCI | Freedom Day vs. iShares Broad USD | Freedom Day vs. iShares Core SP |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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