Correlation Between Tidal Trust and Tema ETF

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

Diversification Opportunities for Tidal Trust and Tema ETF

-0.82

Correlation Coefficient

Tidal Trust  Tema ETF

Pay attention - limited upside

The 3 months correlation between Tidal and Tema is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and Tema ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tema ETF 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 Tema ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tema ETF Trust has no effect on the direction of Tidal Trust i.e., Tidal Trust and Tema ETF go up and down completely randomly.

Pair Corralation between Tidal Trust and Tema ETF

Given the investment horizon of 90 days Tidal Trust II is expected to under-perform the Tema ETF. In addition to that, Tidal Trust is 1.44 times more volatile than Tema ETF Trust. It trades about -0.14 of its total potential returns per unit of risk. Tema ETF Trust is currently generating about 0.16 per unit of volatility. If you would invest  3,591  in Tema ETF Trust on September 13, 2024 and sell it today you would earn a total of  427.00  from holding Tema ETF Trust or generate 11.89% return on investment over 90 days.

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

Tidal Trust II  vs.  Tema ETF Trust

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 inconsistent 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.

Tema ETF Trust

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Tidal Trust and Tema ETF

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

The idea behind Tidal Trust II and Tema ETF 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.