Correlation Between Listed Funds and Tidal Trust

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

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

Diversification Opportunities for Listed Funds and Tidal Trust

-0.06

Correlation Coefficient

Listed Funds  Tidal Trust

Good diversification

The 3 months correlation between Listed and Tidal is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Listed Funds Trust and Tidal Trust III in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust III and Listed Funds 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 Listed Funds Trust are associated (or correlated) with Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust III has no effect on the direction of Listed Funds i.e., Listed Funds and Tidal Trust go up and down completely randomly.

Pair Corralation between Listed Funds and Tidal Trust

Given the investment horizon of 90 days Listed Funds is expected to generate 796.86 times less return on investment than Tidal Trust. But when comparing it to its historical volatility, Listed Funds Trust is 259.9 times less risky than Tidal Trust. It trades about 0.06 of its potential returns per unit of risk. Tidal Trust III is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Tidal Trust III on October 9, 2024 and sell it today you would earn a total of  2,007  from holding Tidal Trust III or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	6.65%
Values	Daily Returns

Listed Funds Trust  vs.  Tidal Trust III

Listed Funds Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tidal Trust III

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust III are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Tidal Trust unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Listed Funds and Tidal Trust

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

The idea behind Listed Funds Trust and Tidal Trust III 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.