Correlation Between US Treasury and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both US Treasury 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 US Treasury and Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Treasury 6 and Tidal Trust II, you can compare the effects of market volatilities on US Treasury 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 US Treasury with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Treasury and Tidal Trust.
Diversification Opportunities for US Treasury and Tidal Trust
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between XBIL and Tidal is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding US Treasury 6 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 US Treasury 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 US Treasury 6 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 US Treasury i.e., US Treasury and Tidal Trust go up and down completely randomly.
Pair Corralation between US Treasury and Tidal Trust
Given the investment horizon of 90 days US Treasury is expected to generate 5.9 times less return on investment than Tidal Trust. But when comparing it to its historical volatility, US Treasury 6 is 22.39 times less risky than Tidal Trust. It trades about 0.69 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,890 in Tidal Trust II on November 1, 2024 and sell it today you would earn a total of 30.00 from holding Tidal Trust II or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Treasury 6 vs. Tidal Trust II
Performance |
| Timeline |
| US Treasury 6 |
| Tidal Trust II |
US Treasury and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Treasury and Tidal Trust
The main advantage of trading using opposite US Treasury and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Treasury 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.| US Treasury vs. Rbb Fund | US Treasury vs. US Treasury 12 | US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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