Correlation Between Tidal Trust and IShares International

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

Diversification Opportunities for Tidal Trust and IShares International

-0.63

Correlation Coefficient

Tidal Trust  IShares International

Excellent diversification

The 3 months correlation between Tidal and IShares is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and iShares International Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares International has no effect on the direction of Tidal Trust i.e., Tidal Trust and IShares International go up and down completely randomly.

Pair Corralation between Tidal Trust and IShares International

Given the investment horizon of 90 days Tidal Trust II is expected to generate 1.79 times more return on investment than IShares International. However, Tidal Trust is 1.79 times more volatile than iShares International Dividend. It trades about 0.08 of its potential returns per unit of risk. iShares International Dividend is currently generating about 0.07 per unit of risk. If you would invest  1,997  in Tidal Trust II on October 26, 2024 and sell it today you would earn a total of  36.00  from holding Tidal Trust II or generate 1.8% return on investment over 90 days.

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

Tidal Trust II  vs.  iShares International Dividend

Tidal Trust II

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

iShares International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tidal Trust and IShares International

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

The idea behind Tidal Trust II and iShares International Dividend 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.