Correlation Between Vanguard FTSE and Tidal ETF

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

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

Diversification Opportunities for Vanguard FTSE and Tidal ETF

-0.33

Correlation Coefficient

Vanguard FTSE  Tidal ETF

Very good diversification

The 3 months correlation between Vanguard and Tidal is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and Tidal ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal ETF Trust and Vanguard FTSE 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 Vanguard FTSE Developed are associated (or correlated) with Tidal ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal ETF Trust has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Tidal ETF go up and down completely randomly.

Pair Corralation between Vanguard FTSE and Tidal ETF

Considering the 90-day investment horizon Vanguard FTSE Developed is expected to under-perform the Tidal ETF. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard FTSE Developed is 1.54 times less risky than Tidal ETF. The etf trades about -0.09 of its potential returns per unit of risk. The Tidal ETF Trust is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,929  in Tidal ETF Trust on August 30, 2024 and sell it today you would earn a total of  259.00  from holding Tidal ETF Trust or generate 13.43% return on investment over 90 days.

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

Vanguard FTSE Developed  vs.  Tidal ETF Trust

Vanguard FTSE Developed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard FTSE Developed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Vanguard FTSE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Tidal ETF Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal ETF Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Tidal ETF displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard FTSE and Tidal ETF

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

The idea behind Vanguard FTSE Developed and Tidal 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.