Correlation Between Western Asset and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Short and Tidal Trust II, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Tidal Trust.
Diversification Opportunities for Western Asset and Tidal Trust
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Tidal is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Short 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 Western Asset 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 Western Asset Short 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 Western Asset i.e., Western Asset and Tidal Trust go up and down completely randomly.
Pair Corralation between Western Asset and Tidal Trust
Given the investment horizon of 90 days Western Asset is expected to generate 9.06 times less return on investment than Tidal Trust. But when comparing it to its historical volatility, Western Asset Short is 29.76 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 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,245 in Tidal Trust II on November 3, 2024 and sell it today you would earn a total of 55.00 from holding Tidal Trust II or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Short vs. Tidal Trust II
Performance |
| Timeline |
| Western Asset Short |
| Tidal Trust II |
Western Asset and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Tidal Trust
The main advantage of trading using opposite Western Asset and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Columbia Diversified Fixed | Western Asset vs. Doubleline Etf Trust | Western Asset vs. Virtus Newfleet ABSMBS | Western Asset vs. Vident Core Bond |
| Tidal Trust vs. Tidal Trust II | Tidal Trust vs. Direxion Daily META | Tidal Trust vs. Direxion Daily META | Tidal Trust vs. Tidal Trust II |
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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