Correlation Between Tidal ETF and Gotham Large

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

Diversification Opportunities for Tidal ETF and Gotham Large

0.54

Correlation Coefficient

Tidal ETF  Gotham Large

Very weak diversification

The 3 months correlation between Tidal and Gotham is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Tidal ETF Trust and Gotham Large Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Large Value 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 Gotham Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Large Value has no effect on the direction of Tidal ETF i.e., Tidal ETF and Gotham Large go up and down completely randomly.

Pair Corralation between Tidal ETF and Gotham Large

Given the investment horizon of 90 days Tidal ETF Trust is expected to under-perform the Gotham Large. In addition to that, Tidal ETF is 1.06 times more volatile than Gotham Large Value. It trades about -0.02 of its total potential returns per unit of risk. Gotham Large Value is currently generating about 0.07 per unit of volatility. If you would invest  1,368  in Gotham Large Value on December 19, 2024 and sell it today you would earn a total of  42.00  from holding Gotham Large Value or generate 3.07% return on investment over 90 days.

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

Tidal ETF Trust  vs.  Gotham Large Value

Tidal ETF Trust

Risk-Adjusted Performance

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 comparatively stable essential indicators, Tidal ETF is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Gotham Large Value

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gotham Large Value are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Gotham Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tidal ETF and Gotham Large

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

The idea behind Tidal ETF Trust and Gotham Large Value 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.