Correlation Between Tidal ETF and Innovator Nasdaq

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

By analyzing existing cross correlation between Tidal ETF Trust and Innovator Nasdaq 100 Power, you can compare the effects of market volatilities on Tidal ETF and Innovator Nasdaq 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 ETF with a short position of Innovator Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal ETF and Innovator Nasdaq.

Diversification Opportunities for Tidal ETF and Innovator Nasdaq

-0.8

Correlation Coefficient

Tidal ETF  Innovator Nasdaq

Pay attention - limited upside

The 3 months correlation between Tidal and Innovator is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tidal ETF Trust and Innovator Nasdaq 100 Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Nasdaq 100 and Tidal ETF 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 ETF Trust are associated (or correlated) with Innovator Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Nasdaq 100 has no effect on the direction of Tidal ETF i.e., Tidal ETF and Innovator Nasdaq go up and down completely randomly.

Pair Corralation between Tidal ETF and Innovator Nasdaq

Given the investment horizon of 90 days Tidal ETF Trust is expected to under-perform the Innovator Nasdaq. In addition to that, Tidal ETF is 1.12 times more volatile than Innovator Nasdaq 100 Power. It trades about -0.02 of its total potential returns per unit of risk. Innovator Nasdaq 100 Power is currently generating about 0.14 per unit of volatility. If you would invest  4,262  in Innovator Nasdaq 100 Power on September 13, 2024 and sell it today you would earn a total of  2,085  from holding Innovator Nasdaq 100 Power or generate 48.92% return on investment over 90 days.

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

Tidal ETF Trust  vs.  Innovator Nasdaq 100 Power

Tidal ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tidal ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Innovator Nasdaq 100

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Nasdaq 100 Power are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Innovator Nasdaq is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Tidal ETF and Innovator Nasdaq

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

The idea behind Tidal ETF Trust and Innovator Nasdaq 100 Power 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.