Correlation Between Tidal ETF and Siren DIVCON

Can any of the company-specific risk be diversified away by investing in both Tidal ETF and Siren DIVCON 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 ETF and Siren DIVCON into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tidal ETF Trust and Siren DIVCON Leaders, you can compare the effects of market volatilities on Tidal ETF and Siren DIVCON 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 ETF with a short position of Siren DIVCON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal ETF and Siren DIVCON.

Diversification Opportunities for Tidal ETF and Siren DIVCON

0.84

Correlation Coefficient

Tidal ETF  Siren DIVCON

Very poor diversification

The 3 months correlation between Tidal and Siren is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Tidal ETF Trust and Siren DIVCON Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siren DIVCON Leaders and Tidal ETF 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 ETF Trust are associated (or correlated) with Siren DIVCON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siren DIVCON Leaders has no effect on the direction of Tidal ETF i.e., Tidal ETF and Siren DIVCON go up and down completely randomly.

Pair Corralation between Tidal ETF and Siren DIVCON

Given the investment horizon of 90 days Tidal ETF Trust is expected to under-perform the Siren DIVCON. But the etf apears to be less risky and, when comparing its historical volatility, Tidal ETF Trust is 1.17 times less risky than Siren DIVCON. The etf trades about -0.28 of its potential returns per unit of risk. The Siren DIVCON Leaders is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest  6,958  in Siren DIVCON Leaders on October 12, 2024 and sell it today you would lose (258.00) from holding Siren DIVCON Leaders or give up 3.71% of portfolio value over 90 days.

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

Tidal ETF Trust  vs.  Siren DIVCON Leaders

Tidal ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Siren DIVCON Leaders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siren DIVCON Leaders has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Siren DIVCON is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tidal ETF and Siren DIVCON

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

The idea behind Tidal ETF Trust and Siren DIVCON Leaders 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.