Correlation Between EA Series and Tidal Trust

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

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

Diversification Opportunities for EA Series and Tidal Trust

0.2

Correlation Coefficient

EA Series  Tidal Trust

Modest diversification

The 3 months correlation between DRAI and Tidal is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding EA Series 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 EA Series 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 EA Series 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 EA Series i.e., EA Series and Tidal Trust go up and down completely randomly.

Pair Corralation between EA Series and Tidal Trust

Given the investment horizon of 90 days EA Series Trust is expected to under-perform the Tidal Trust. But the etf apears to be less risky and, when comparing its historical volatility, EA Series Trust is 273.07 times less risky than Tidal Trust. The etf trades about -0.03 of its potential returns per unit of risk. The Tidal Trust III is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Tidal Trust III on September 3, 2024 and sell it today you would earn a total of  2,044  from holding Tidal Trust III or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	9.8%
Values	Daily Returns

EA Series Trust  vs.  Tidal Trust III

EA Series Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, EA Series is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Tidal Trust III

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust III are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Tidal Trust unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EA Series and Tidal Trust

The main advantage of trading using opposite EA Series and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Series 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 EA Series 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.