Correlation Between Tidal Trust and PGIM Large

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

Diversification Opportunities for Tidal Trust and PGIM Large

-0.26

Correlation Coefficient

Tidal Trust  PGIM Large

Very good diversification

The 3 months correlation between Tidal and PGIM is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and PGIM Large Cap Buffer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Large Cap 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 PGIM Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Large Cap has no effect on the direction of Tidal Trust i.e., Tidal Trust and PGIM Large go up and down completely randomly.

Pair Corralation between Tidal Trust and PGIM Large

Given the investment horizon of 90 days Tidal Trust II is expected to under-perform the PGIM Large. In addition to that, Tidal Trust is 3.12 times more volatile than PGIM Large Cap Buffer. It trades about -0.01 of its total potential returns per unit of risk. PGIM Large Cap Buffer is currently generating about 0.1 per unit of volatility. If you would invest  2,499  in PGIM Large Cap Buffer on December 28, 2024 and sell it today you would earn a total of  171.00  from holding PGIM Large Cap Buffer or generate 6.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	47.87%
Values	Daily Returns

Tidal Trust II  vs.  PGIM Large Cap Buffer

Tidal Trust II

Risk-Adjusted Performance

Good

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.

PGIM Large Cap

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Tidal Trust and PGIM Large

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

The idea behind Tidal Trust II and PGIM Large Cap Buffer 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.