Correlation Between Tidal Trust and AIM ETF

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

Diversification Opportunities for Tidal Trust and AIM ETF

-0.37

Correlation Coefficient

Tidal Trust  AIM ETF

Very good diversification

The 3 months correlation between Tidal and AIM is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF Products 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 AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of Tidal Trust i.e., Tidal Trust and AIM ETF go up and down completely randomly.

Pair Corralation between Tidal Trust and AIM ETF

Given the investment horizon of 90 days Tidal Trust II is expected to generate 2.91 times more return on investment than AIM ETF. However, Tidal Trust is 2.91 times more volatile than AIM ETF Products. It trades about 0.2 of its potential returns per unit of risk. AIM ETF Products is currently generating about -0.03 per unit of risk. If you would invest  1,977  in Tidal Trust II on December 27, 2024 and sell it today you would earn a total of  218.00  from holding Tidal Trust II or generate 11.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.33%
Values	Daily Returns

Tidal Trust II  vs.  AIM ETF Products

Tidal Trust II

Risk-Adjusted Performance

Solid

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 rather unfluctuating basic indicators, Tidal Trust exhibited solid returns over the last few months and may actually be approaching a breakup point.

AIM ETF Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days AIM ETF Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, AIM ETF is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Tidal Trust and AIM ETF

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

The idea behind Tidal Trust II and AIM ETF Products 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.