Correlation Between Tidal Trust and ProShares Smart

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

Diversification Opportunities for Tidal Trust and ProShares Smart

0.61

Correlation Coefficient

Tidal Trust  ProShares Smart

Poor diversification

The 3 months correlation between Tidal and ProShares is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and ProShares Smart Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Smart Materials 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 ProShares Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Smart Materials has no effect on the direction of Tidal Trust i.e., Tidal Trust and ProShares Smart go up and down completely randomly.

Pair Corralation between Tidal Trust and ProShares Smart

Given the investment horizon of 90 days Tidal Trust II is expected to under-perform the ProShares Smart. In addition to that, Tidal Trust is 1.77 times more volatile than ProShares Smart Materials. It trades about -0.14 of its total potential returns per unit of risk. ProShares Smart Materials is currently generating about -0.07 per unit of volatility. If you would invest  3,234  in ProShares Smart Materials on September 13, 2024 and sell it today you would lose (138.00) from holding ProShares Smart Materials or give up 4.27% of portfolio value over 90 days.

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

Tidal Trust II  vs.  ProShares Smart Materials

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 inconsistent 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.

ProShares Smart Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Smart Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ProShares Smart 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 ProShares Smart

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

The idea behind Tidal Trust II and ProShares Smart Materials 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 Commodity Directory module to find actively traded commodities issued by global exchanges.