Correlation Between Tidal Trust and ETRACS 2x

Can any of the company-specific risk be diversified away by investing in both Tidal Trust and ETRACS 2x 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 ETRACS 2x 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 ETRACS 2x Leveraged, you can compare the effects of market volatilities on Tidal Trust and ETRACS 2x 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 ETRACS 2x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and ETRACS 2x.

Diversification Opportunities for Tidal Trust and ETRACS 2x

-0.58

Correlation Coefficient

Tidal Trust  ETRACS 2x

Excellent diversification

The 3 months correlation between Tidal and ETRACS is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and ETRACS 2x Leveraged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS 2x Leveraged 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 ETRACS 2x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS 2x Leveraged has no effect on the direction of Tidal Trust i.e., Tidal Trust and ETRACS 2x go up and down completely randomly.

Pair Corralation between Tidal Trust and ETRACS 2x

Given the investment horizon of 90 days Tidal Trust II is expected to generate 1.27 times more return on investment than ETRACS 2x. However, Tidal Trust is 1.27 times more volatile than ETRACS 2x Leveraged. It trades about 0.06 of its potential returns per unit of risk. ETRACS 2x Leveraged is currently generating about 0.0 per unit of risk. If you would invest  1,136  in Tidal Trust II on December 28, 2024 and sell it today you would earn a total of  110.00  from holding Tidal Trust II or generate 9.68% return on investment over 90 days.

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

Tidal Trust II  vs.  ETRACS 2x Leveraged

Tidal Trust II

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Tidal Trust unveiled solid returns over the last few months and may actually be approaching a breakup point.

ETRACS 2x Leveraged

Risk-Adjusted Performance

Very Weak

Over the last 90 days ETRACS 2x Leveraged has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, ETRACS 2x is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Tidal Trust and ETRACS 2x

The main advantage of trading using opposite Tidal Trust and ETRACS 2x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, ETRACS 2x 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 ETRACS 2x will offset losses from the drop in ETRACS 2x's long position.

The idea behind Tidal Trust II and ETRACS 2x Leveraged 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.