Correlation Between Vanguard Total and Tidal Trust

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

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

Diversification Opportunities for Vanguard Total and Tidal Trust

0.24

Correlation Coefficient

Vanguard Total  Tidal Trust

Modest diversification

The 3 months correlation between Vanguard and Tidal is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond 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 Vanguard Total 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 Vanguard Total Bond 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 Vanguard Total i.e., Vanguard Total and Tidal Trust go up and down completely randomly.

Pair Corralation between Vanguard Total and Tidal Trust

Considering the 90-day investment horizon Vanguard Total Bond is expected to generate 0.07 times more return on investment than Tidal Trust. However, Vanguard Total Bond is 14.34 times less risky than Tidal Trust. It trades about -0.11 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.07 per unit of risk. If you would invest  7,315  in Vanguard Total Bond on October 9, 2024 and sell it today you would lose (161.50) from holding Vanguard Total Bond or give up 2.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	30.65%
Values	Daily Returns

Vanguard Total Bond  vs.  Tidal Trust II

Vanguard Total Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vanguard Total is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 uncertain performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Vanguard Total and Tidal Trust

The main advantage of trading using opposite Vanguard Total and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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 Vanguard Total Bond 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.