Correlation Between Tidal Trust and EA Series

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

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

Diversification Opportunities for Tidal Trust and EA Series

0.19

Correlation Coefficient

Tidal Trust  EA Series

Average diversification

The 3 months correlation between Tidal and DRAI is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust III and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust 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 III are associated (or correlated) with EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Tidal Trust i.e., Tidal Trust and EA Series go up and down completely randomly.

Pair Corralation between Tidal Trust and EA Series

Given the investment horizon of 90 days Tidal Trust III is expected to generate 273.1 times more return on investment than EA Series. However, Tidal Trust is 273.1 times more volatile than EA Series Trust. It trades about 0.32 of its potential returns per unit of risk. EA Series Trust is currently generating about -0.03 per unit of risk. If you would invest  0.00  in Tidal Trust III on September 3, 2024 and sell it today you would earn a total of  2,023  from holding Tidal Trust III or generate 9.223372036854776E16% return on investment over 90 days.

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

Tidal Trust III  vs.  EA Series Trust

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. Despite fairly abnormal basic indicators, Tidal Trust demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Tidal Trust and EA Series

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

The idea behind Tidal Trust III and EA Series Trust 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.