Correlation Between ProShares Hedge and Tidal Trust

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

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

Diversification Opportunities for ProShares Hedge and Tidal Trust

0.36

Correlation Coefficient

ProShares Hedge  Tidal Trust

Weak diversification

The 3 months correlation between ProShares and Tidal is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Hedge Replication and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II and ProShares Hedge 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 ProShares Hedge Replication 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 II has no effect on the direction of ProShares Hedge i.e., ProShares Hedge and Tidal Trust go up and down completely randomly.

Pair Corralation between ProShares Hedge and Tidal Trust

Considering the 90-day investment horizon ProShares Hedge Replication is expected to generate 0.33 times more return on investment than Tidal Trust. However, ProShares Hedge Replication is 3.06 times less risky than Tidal Trust. It trades about 0.0 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.15 per unit of risk. If you would invest  4,909  in ProShares Hedge Replication on December 28, 2024 and sell it today you would earn a total of  2.00  from holding ProShares Hedge Replication or generate 0.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

ProShares Hedge Replication  vs.  Tidal Trust II

ProShares Hedge Repl

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Hedge Replication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, ProShares Hedge is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Tidal Trust II

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tidal Trust II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with ProShares Hedge and Tidal Trust

The main advantage of trading using opposite ProShares Hedge and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Hedge 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 ProShares Hedge Replication and Tidal Trust II 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.