Correlation Between Tidal Trust and WBI Power

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

Diversification Opportunities for Tidal Trust and WBI Power

-0.03

Correlation Coefficient

Tidal Trust  WBI Power

Good diversification

The 3 months correlation between Tidal and WBI is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and WBI Power Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WBI Power Factor 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 WBI Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WBI Power Factor has no effect on the direction of Tidal Trust i.e., Tidal Trust and WBI Power go up and down completely randomly.

Pair Corralation between Tidal Trust and WBI Power

Given the investment horizon of 90 days Tidal Trust II is expected to generate 3.23 times more return on investment than WBI Power. However, Tidal Trust is 3.23 times more volatile than WBI Power Factor. It trades about 0.07 of its potential returns per unit of risk. WBI Power Factor is currently generating about -0.01 per unit of risk. If you would invest  1,113  in Tidal Trust II on December 26, 2024 and sell it today you would earn a total of  122.00  from holding Tidal Trust II or generate 10.96% return on investment over 90 days.

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

Tidal Trust II  vs.  WBI Power Factor

Tidal Trust II

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 5 (%) 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.

WBI Power Factor

Risk-Adjusted Performance

Very Weak

Over the last 90 days WBI Power Factor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, WBI Power is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tidal Trust and WBI Power

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

The idea behind Tidal Trust II and WBI Power Factor 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 Global Correlations module to find global opportunities by holding instruments from different markets.