Correlation Between Tidal Trust and VictoryShares THB

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

Diversification Opportunities for Tidal Trust and VictoryShares THB

0.21

Correlation Coefficient

Tidal Trust  VictoryShares THB

Modest diversification

The 3 months correlation between Tidal and VictoryShares is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and VictoryShares THB Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares THB Mid 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 VictoryShares THB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares THB Mid has no effect on the direction of Tidal Trust i.e., Tidal Trust and VictoryShares THB go up and down completely randomly.

Pair Corralation between Tidal Trust and VictoryShares THB

Given the investment horizon of 90 days Tidal Trust II is expected to generate 3.52 times more return on investment than VictoryShares THB. However, Tidal Trust is 3.52 times more volatile than VictoryShares THB Mid. It trades about 0.0 of its potential returns per unit of risk. VictoryShares THB Mid is currently generating about -0.24 per unit of risk. If you would invest  1,226  in Tidal Trust II on November 28, 2024 and sell it today you would lose (29.00) from holding Tidal Trust II or give up 2.37% of portfolio value over 90 days.

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

Tidal Trust II  vs.  VictoryShares THB Mid

Tidal Trust II

Risk-Adjusted Performance

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

VictoryShares THB Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares THB Mid has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Etf's fundamental indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with Tidal Trust and VictoryShares THB

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

The idea behind Tidal Trust II and VictoryShares THB Mid 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.