Correlation Between ETRACS Monthly and Tidal Trust

Can any of the company-specific risk be diversified away by investing in both ETRACS Monthly 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 ETRACS Monthly and Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ETRACS Monthly Pay and Tidal Trust II, you can compare the effects of market volatilities on ETRACS Monthly 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 ETRACS Monthly with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Monthly and Tidal Trust.

Diversification Opportunities for ETRACS Monthly and Tidal Trust

0.79

Correlation Coefficient

ETRACS Monthly  Tidal Trust

Poor diversification

The 3 months correlation between ETRACS and Tidal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay 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 ETRACS Monthly 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 ETRACS Monthly Pay 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 ETRACS Monthly i.e., ETRACS Monthly and Tidal Trust go up and down completely randomly.

Pair Corralation between ETRACS Monthly and Tidal Trust

Given the investment horizon of 90 days ETRACS Monthly is expected to generate 3.42 times less return on investment than Tidal Trust. But when comparing it to its historical volatility, ETRACS Monthly Pay is 1.84 times less risky than Tidal Trust. It trades about 0.11 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  895.00  in Tidal Trust II on September 12, 2024 and sell it today you would earn a total of  199.00  from holding Tidal Trust II or generate 22.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ETRACS Monthly Pay  vs.  Tidal Trust II

ETRACS Monthly Pay

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ETRACS Monthly Pay are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ETRACS Monthly is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Tidal Trust II

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Tidal Trust disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ETRACS Monthly and Tidal Trust

The main advantage of trading using opposite ETRACS Monthly and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS Monthly 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.

The idea behind ETRACS Monthly Pay and Tidal Trust II 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.