Correlation Between Tidal Trust and VanEck Investment

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

Diversification Opportunities for Tidal Trust and VanEck Investment

-0.31

Correlation Coefficient

Tidal Trust  VanEck Investment

Very good diversification

The 3 months correlation between Tidal and VanEck is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and VanEck Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Investment Grade 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 VanEck Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Investment Grade has no effect on the direction of Tidal Trust i.e., Tidal Trust and VanEck Investment go up and down completely randomly.

Pair Corralation between Tidal Trust and VanEck Investment

Given the investment horizon of 90 days Tidal Trust is expected to generate 1.59 times less return on investment than VanEck Investment. In addition to that, Tidal Trust is 31.33 times more volatile than VanEck Investment Grade. It trades about 0.01 of its total potential returns per unit of risk. VanEck Investment Grade is currently generating about 0.53 per unit of volatility. If you would invest  2,503  in VanEck Investment Grade on September 12, 2024 and sell it today you would earn a total of  43.00  from holding VanEck Investment Grade or generate 1.72% 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.  VanEck Investment Grade

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 rather sound basic indicators, Tidal Trust is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

VanEck Investment Grade

Risk-Adjusted Performance

41 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Investment Grade are ranked lower than 41 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, VanEck Investment is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Tidal Trust and VanEck Investment

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

The idea behind Tidal Trust II and VanEck Investment Grade 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.