Correlation Between Tidal ETF and Swan Hedged

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

Diversification Opportunities for Tidal ETF and Swan Hedged

0.87

Correlation Coefficient

Tidal ETF  Swan Hedged

Very poor diversification

The 3 months correlation between Tidal and Swan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Tidal ETF Trust and Swan Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swan Hedged Equity 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 Swan Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swan Hedged Equity has no effect on the direction of Tidal ETF i.e., Tidal ETF and Swan Hedged go up and down completely randomly.

Pair Corralation between Tidal ETF and Swan Hedged

Given the investment horizon of 90 days Tidal ETF Trust is expected to generate 1.53 times more return on investment than Swan Hedged. However, Tidal ETF is 1.53 times more volatile than Swan Hedged Equity. It trades about -0.06 of its potential returns per unit of risk. Swan Hedged Equity is currently generating about -0.11 per unit of risk. If you would invest  2,414  in Tidal ETF Trust on December 17, 2024 and sell it today you would lose (85.00) from holding Tidal ETF Trust or give up 3.52% 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.  Swan Hedged Equity

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.

Swan Hedged Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swan Hedged Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Swan Hedged is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tidal ETF and Swan Hedged

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

The idea behind Tidal ETF Trust and Swan Hedged Equity 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.