Correlation Between Tidal Trust and IShares IBonds

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

Diversification Opportunities for Tidal Trust and IShares IBonds

-0.32

Correlation Coefficient

Tidal Trust  IShares IBonds

Very good diversification

The 3 months correlation between Tidal and IShares is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and iShares iBonds Dec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBonds Dec 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 IShares IBonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBonds Dec has no effect on the direction of Tidal Trust i.e., Tidal Trust and IShares IBonds go up and down completely randomly.

Pair Corralation between Tidal Trust and IShares IBonds

Given the investment horizon of 90 days Tidal Trust II is expected to generate 0.76 times more return on investment than IShares IBonds. However, Tidal Trust II is 1.32 times less risky than IShares IBonds. It trades about 0.1 of its potential returns per unit of risk. iShares iBonds Dec is currently generating about -0.07 per unit of risk. If you would invest  1,916  in Tidal Trust II on September 3, 2024 and sell it today you would earn a total of  38.17  from holding Tidal Trust II or generate 1.99% return on investment over 90 days.

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

Tidal Trust II  vs.  iShares iBonds Dec

Tidal Trust II

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Tidal Trust is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

iShares iBonds Dec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares iBonds Dec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares IBonds is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Tidal Trust and IShares IBonds

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

The idea behind Tidal Trust II and iShares iBonds Dec 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.