Correlation Between Tidal Trust and IShares Future

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

Diversification Opportunities for Tidal Trust and IShares Future

-0.68

Correlation Coefficient

Tidal Trust  IShares Future

Excellent diversification

The 3 months correlation between Tidal and IShares is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and iShares Future AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Future AI 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 Future. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Future AI has no effect on the direction of Tidal Trust i.e., Tidal Trust and IShares Future go up and down completely randomly.

Pair Corralation between Tidal Trust and IShares Future

Given the investment horizon of 90 days Tidal Trust II is expected to generate 71.32 times more return on investment than IShares Future. However, Tidal Trust is 71.32 times more volatile than iShares Future AI. It trades about 0.1 of its potential returns per unit of risk. iShares Future AI is currently generating about 0.06 per unit of risk. If you would invest  0.00  in Tidal Trust II on September 19, 2024 and sell it today you would earn a total of  1,363  from holding Tidal Trust II or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	21.17%
Values	Daily Returns

Tidal Trust II  vs.  iShares Future AI

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 latest inconsistent performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

iShares Future AI

Risk-Adjusted Performance

7 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Future AI are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, IShares Future may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tidal Trust and IShares Future

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

The idea behind Tidal Trust II and iShares Future AI 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.