Correlation Between Global X and Tidal ETF

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

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

Diversification Opportunities for Global X and Tidal ETF

0.48

Correlation Coefficient

Global X  Tidal ETF

Very weak diversification

The 3 months correlation between Global and Tidal is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Tidal ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal ETF Trust and Global X 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 Global X Funds are associated (or correlated) with Tidal ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal ETF Trust has no effect on the direction of Global X i.e., Global X and Tidal ETF go up and down completely randomly.

Pair Corralation between Global X and Tidal ETF

Given the investment horizon of 90 days Global X Funds is expected to generate 1.84 times more return on investment than Tidal ETF. However, Global X is 1.84 times more volatile than Tidal ETF Trust. It trades about 0.15 of its potential returns per unit of risk. Tidal ETF Trust is currently generating about 0.04 per unit of risk. If you would invest  1,962  in Global X Funds on December 28, 2024 and sell it today you would earn a total of  253.00  from holding Global X Funds or generate 12.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Global X Funds  vs.  Tidal ETF Trust

Global X Funds

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Global X showed solid returns over the last few months and may actually be approaching a breakup point.

Tidal ETF Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal ETF Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Tidal ETF is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global X and Tidal ETF

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

The idea behind Global X Funds and Tidal ETF Trust 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.