Correlation Between Tidal Trust and IShares MSCI

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

Diversification Opportunities for Tidal Trust and IShares MSCI

-0.57

Correlation Coefficient

Tidal Trust  IShares MSCI

Excellent diversification

The 3 months correlation between Tidal and IShares is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and iShares MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI China 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI China has no effect on the direction of Tidal Trust i.e., Tidal Trust and IShares MSCI go up and down completely randomly.

Pair Corralation between Tidal Trust and IShares MSCI

Given the investment horizon of 90 days Tidal Trust II is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, Tidal Trust II is 1.44 times less risky than IShares MSCI. The etf trades about -0.09 of its potential returns per unit of risk. The iShares MSCI China is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,695  in iShares MSCI China on December 29, 2024 and sell it today you would earn a total of  886.00  from holding iShares MSCI China or generate 18.87% 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.  iShares MSCI China

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 latest weak performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

iShares MSCI China

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI China are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, IShares MSCI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tidal Trust and IShares MSCI

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

The idea behind Tidal Trust II and iShares MSCI China 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.