Correlation Between Tidal Trust and KraneShares Trust

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

Diversification Opportunities for Tidal Trust and KraneShares Trust

0.0

Correlation Coefficient

Tidal Trust  KraneShares Trust

Pay attention - limited upside

The 3 months correlation between Tidal and KraneShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust 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 KraneShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Trust has no effect on the direction of Tidal Trust i.e., Tidal Trust and KraneShares Trust go up and down completely randomly.

Pair Corralation between Tidal Trust and KraneShares Trust

Given the investment horizon of 90 days Tidal Trust II is expected to generate 0.77 times more return on investment than KraneShares Trust. However, Tidal Trust II is 1.31 times less risky than KraneShares Trust. It trades about 0.16 of its potential returns per unit of risk. KraneShares Trust is currently generating about 0.05 per unit of risk. If you would invest  1,680  in Tidal Trust II on September 12, 2024 and sell it today you would earn a total of  166.00  from holding Tidal Trust II or generate 9.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Tidal Trust II  vs.  KraneShares Trust

Tidal Trust II

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent essential indicators, Tidal Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KraneShares Trust

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, KraneShares Trust is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Tidal Trust and KraneShares Trust

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

The idea behind Tidal Trust II and KraneShares Trust 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.