Correlation Between Tidal Trust and IShares Energy

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

Diversification Opportunities for Tidal Trust and IShares Energy

0.59

Correlation Coefficient

Tidal Trust  IShares Energy

Very weak diversification

The 3 months correlation between Tidal and IShares is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and iShares Energy Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Energy Storage 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 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Energy Storage has no effect on the direction of Tidal Trust i.e., Tidal Trust and IShares Energy go up and down completely randomly.

Pair Corralation between Tidal Trust and IShares Energy

Given the investment horizon of 90 days Tidal Trust II is expected to generate 1.42 times more return on investment than IShares Energy. However, Tidal Trust is 1.42 times more volatile than iShares Energy Storage. It trades about 0.08 of its potential returns per unit of risk. iShares Energy Storage is currently generating about -0.03 per unit of risk. If you would invest  1,277  in Tidal Trust II on September 12, 2024 and sell it today you would earn a total of  29.00  from holding Tidal Trust II or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Tidal Trust II  vs.  iShares Energy Storage

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 weak performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

iShares Energy Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Energy Storage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Energy is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tidal Trust and IShares Energy

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

The idea behind Tidal Trust II and iShares Energy Storage 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.