Correlation Between IShares Core and Tidal Trust

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

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

Diversification Opportunities for IShares Core and Tidal Trust

0.42

Correlation Coefficient

IShares Core  Tidal Trust

Very weak diversification

The 3 months correlation between IShares and Tidal is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Aggressive and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II and IShares Core 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 iShares Core Aggressive are associated (or correlated) with Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of IShares Core i.e., IShares Core and Tidal Trust go up and down completely randomly.

Pair Corralation between IShares Core and Tidal Trust

Considering the 90-day investment horizon IShares Core is expected to generate 2.09 times less return on investment than Tidal Trust. But when comparing it to its historical volatility, iShares Core Aggressive is 1.77 times less risky than Tidal Trust. It trades about 0.12 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,363  in Tidal Trust II on September 12, 2024 and sell it today you would earn a total of  194.00  from holding Tidal Trust II or generate 8.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

iShares Core Aggressive  vs.  Tidal Trust II

iShares Core Aggressive

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Aggressive are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Tidal Trust II

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Tidal Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Core and Tidal Trust

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

The idea behind iShares Core Aggressive and Tidal Trust II 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.