Correlation Between Tidal Trust and AdvisorShares Psychedelics

Can any of the company-specific risk be diversified away by investing in both Tidal Trust and AdvisorShares Psychedelics 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 AdvisorShares Psychedelics 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 AdvisorShares Psychedelics ETF, you can compare the effects of market volatilities on Tidal Trust and AdvisorShares Psychedelics 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 AdvisorShares Psychedelics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and AdvisorShares Psychedelics.

Diversification Opportunities for Tidal Trust and AdvisorShares Psychedelics

-0.44

Correlation Coefficient

Tidal Trust  AdvisorShares Psychedelics

Very good diversification

The 3 months correlation between Tidal and AdvisorShares is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and AdvisorShares Psychedelics ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Psychedelics 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 AdvisorShares Psychedelics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Psychedelics has no effect on the direction of Tidal Trust i.e., Tidal Trust and AdvisorShares Psychedelics go up and down completely randomly.

Pair Corralation between Tidal Trust and AdvisorShares Psychedelics

Given the investment horizon of 90 days Tidal Trust II is expected to under-perform the AdvisorShares Psychedelics. But the etf apears to be less risky and, when comparing its historical volatility, Tidal Trust II is 8.3 times less risky than AdvisorShares Psychedelics. The etf trades about -0.02 of its potential returns per unit of risk. The AdvisorShares Psychedelics ETF is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  838.00  in AdvisorShares Psychedelics ETF on September 1, 2024 and sell it today you would earn a total of  380.00  from holding AdvisorShares Psychedelics ETF or generate 45.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Tidal Trust II  vs.  AdvisorShares Psychedelics ETF

Tidal Trust II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tidal Trust II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Tidal Trust is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

AdvisorShares Psychedelics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares Psychedelics ETF are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating forward indicators, AdvisorShares Psychedelics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tidal Trust and AdvisorShares Psychedelics

The main advantage of trading using opposite Tidal Trust and AdvisorShares Psychedelics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, AdvisorShares Psychedelics 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 AdvisorShares Psychedelics will offset losses from the drop in AdvisorShares Psychedelics' long position.

The idea behind Tidal Trust II and AdvisorShares Psychedelics ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.