Correlation Between Tidal Trust and Global X

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

Diversification Opportunities for Tidal Trust and Global X

0.53

Correlation Coefficient

Tidal Trust  Global X

Very weak diversification

The 3 months correlation between Tidal and Global is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and Global X NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X NASDAQ 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X NASDAQ has no effect on the direction of Tidal Trust i.e., Tidal Trust and Global X go up and down completely randomly.

Pair Corralation between Tidal Trust and Global X

Given the investment horizon of 90 days Tidal Trust II is expected to under-perform the Global X. In addition to that, Tidal Trust is 1.26 times more volatile than Global X NASDAQ. It trades about -0.27 of its total potential returns per unit of risk. Global X NASDAQ is currently generating about 0.09 per unit of volatility. If you would invest  1,747  in Global X NASDAQ on October 22, 2024 and sell it today you would earn a total of  18.00  from holding Global X NASDAQ or generate 1.03% return on investment over 90 days.

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

Tidal Trust II  vs.  Global X NASDAQ

Tidal Trust II

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Tidal Trust may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Global X NASDAQ

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X NASDAQ are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, Global X 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 Global X

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

The idea behind Tidal Trust II and Global X NASDAQ 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.