Correlation Between Tidal Trust and GraniteShares

Can any of the company-specific risk be diversified away by investing in both Tidal Trust and GraniteShares 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 GraniteShares 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 GraniteShares 2x Long, you can compare the effects of market volatilities on Tidal Trust and GraniteShares 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 GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and GraniteShares.

Diversification Opportunities for Tidal Trust and GraniteShares

0.17

Correlation Coefficient

Tidal Trust  GraniteShares

Average diversification

The 3 months correlation between Tidal and GraniteShares is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and GraniteShares 2x Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 2x Long 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 GraniteShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 2x Long has no effect on the direction of Tidal Trust i.e., Tidal Trust and GraniteShares go up and down completely randomly.

Pair Corralation between Tidal Trust and GraniteShares

Given the investment horizon of 90 days Tidal Trust is expected to generate 3.41 times less return on investment than GraniteShares. But when comparing it to its historical volatility, Tidal Trust II is 1.51 times less risky than GraniteShares. It trades about 0.11 of its potential returns per unit of risk. GraniteShares 2x Long is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,317  in GraniteShares 2x Long on September 12, 2024 and sell it today you would earn a total of  276.00  from holding GraniteShares 2x Long or generate 11.91% return on investment over 90 days.

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

Tidal Trust II  vs.  GraniteShares 2x Long

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 weak performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

GraniteShares 2x Long

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 2x Long are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, GraniteShares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tidal Trust and GraniteShares

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

The idea behind Tidal Trust II and GraniteShares 2x Long 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.