Correlation Between Tidal Trust and JPMorgan Equity

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

Diversification Opportunities for Tidal Trust and JPMorgan Equity

0.38

Correlation Coefficient

Tidal Trust  JPMorgan Equity

Weak diversification

The 3 months correlation between Tidal and JPMorgan is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and JPMorgan Equity Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Equity Premium 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 JPMorgan Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Equity Premium has no effect on the direction of Tidal Trust i.e., Tidal Trust and JPMorgan Equity go up and down completely randomly.

Pair Corralation between Tidal Trust and JPMorgan Equity

Given the investment horizon of 90 days Tidal Trust II is expected to generate 1.04 times more return on investment than JPMorgan Equity. However, Tidal Trust is 1.04 times more volatile than JPMorgan Equity Premium. It trades about -0.09 of its potential returns per unit of risk. JPMorgan Equity Premium is currently generating about -0.16 per unit of risk. If you would invest  1,700  in Tidal Trust II on October 8, 2024 and sell it today you would lose (23.00) from holding Tidal Trust II or give up 1.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Tidal Trust II  vs.  JPMorgan Equity Premium

Tidal Trust II

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Tidal Trust displayed solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan Equity Premium

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Equity Premium are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, JPMorgan Equity is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Tidal Trust and JPMorgan Equity

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

The idea behind Tidal Trust II and JPMorgan Equity Premium 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.