Correlation Between Tidal Trust and EA Series

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

Diversification Opportunities for Tidal Trust and EA Series

0.19

Correlation Coefficient

Tidal Trust  EA Series

Average diversification

The 3 months correlation between Tidal and CCMG is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust 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 EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Tidal Trust i.e., Tidal Trust and EA Series go up and down completely randomly.

Pair Corralation between Tidal Trust and EA Series

Given the investment horizon of 90 days Tidal Trust II is expected to generate 127.92 times more return on investment than EA Series. However, Tidal Trust is 127.92 times more volatile than EA Series Trust. It trades about 0.09 of its potential returns per unit of risk. EA Series Trust is currently generating about 0.07 per unit of risk. If you would invest  0.00  in Tidal Trust II on October 21, 2024 and sell it today you would earn a total of  1,265  from holding Tidal Trust II or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	49.41%
Values	Daily Returns

Tidal Trust II  vs.  EA Series Trust

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 comparatively stable basic indicators, Tidal Trust is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

EA Series Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EA Series Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, EA Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Tidal Trust and EA Series

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

The idea behind Tidal Trust II and EA Series 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.