Correlation Between Tidal Trust and Arrow ETF

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

Diversification Opportunities for Tidal Trust and Arrow ETF

0.82

Correlation Coefficient

Tidal Trust  Arrow ETF

Very poor diversification

The 3 months correlation between Tidal and Arrow is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and Arrow ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow ETF 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 II are associated (or correlated) with Arrow ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow ETF Trust has no effect on the direction of Tidal Trust i.e., Tidal Trust and Arrow ETF go up and down completely randomly.

Pair Corralation between Tidal Trust and Arrow ETF

Allowing for the 90-day total investment horizon Tidal Trust II is expected to under-perform the Arrow ETF. In addition to that, Tidal Trust is 5.65 times more volatile than Arrow ETF Trust. It trades about -0.06 of its total potential returns per unit of risk. Arrow ETF Trust is currently generating about 0.03 per unit of volatility. If you would invest  1,167  in Arrow ETF Trust on October 5, 2024 and sell it today you would earn a total of  62.00  from holding Arrow ETF Trust or generate 5.31% return on investment over 90 days.

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

Tidal Trust II  vs.  Arrow ETF Trust

Tidal Trust II

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Etf's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Arrow ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Tidal Trust and Arrow ETF

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

The idea behind Tidal Trust II and Arrow ETF 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..