Correlation Between Tidal Trust and SPDR SSgA

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

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

Diversification Opportunities for Tidal Trust and SPDR SSgA

-0.07

Correlation Coefficient

Tidal Trust  SPDR SSgA

Good diversification

The 3 months correlation between Tidal and SPDR is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and SPDR SSgA Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Global 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 II are associated (or correlated) with SPDR SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSgA Global has no effect on the direction of Tidal Trust i.e., Tidal Trust and SPDR SSgA go up and down completely randomly.

Pair Corralation between Tidal Trust and SPDR SSgA

Allowing for the 90-day total investment horizon Tidal Trust II is expected to under-perform the SPDR SSgA. But the etf apears to be less risky and, when comparing its historical volatility, Tidal Trust II is 1.44 times less risky than SPDR SSgA. The etf trades about -0.08 of its potential returns per unit of risk. The SPDR SSgA Global is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,467  in SPDR SSgA Global on December 26, 2024 and sell it today you would earn a total of  100.00  from holding SPDR SSgA Global or generate 2.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Tidal Trust II  vs.  SPDR SSgA Global

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. Despite nearly stable technical and fundamental indicators, Tidal Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

SPDR SSgA Global

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSgA Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, SPDR SSgA is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Tidal Trust and SPDR SSgA

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

The idea behind Tidal Trust II and SPDR SSgA Global 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.