Correlation Between VanEck High and Tidal Trust

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

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

Diversification Opportunities for VanEck High and Tidal Trust

0.94

Correlation Coefficient

VanEck High  Tidal Trust

Almost no diversification

The 3 months correlation between VanEck and Tidal is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding VanEck High Yield and Tidal Trust III in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust III and VanEck High 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 VanEck High Yield 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 III has no effect on the direction of VanEck High i.e., VanEck High and Tidal Trust go up and down completely randomly.

Pair Corralation between VanEck High and Tidal Trust

Considering the 90-day investment horizon VanEck High Yield is expected to under-perform the Tidal Trust. In addition to that, VanEck High is 1.04 times more volatile than Tidal Trust III. It trades about -0.05 of its total potential returns per unit of risk. Tidal Trust III is currently generating about -0.01 per unit of volatility. If you would invest  2,517  in Tidal Trust III on December 28, 2024 and sell it today you would lose (4.00) from holding Tidal Trust III or give up 0.16% of portfolio value over 90 days.

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

VanEck High Yield  vs.  Tidal Trust III

VanEck High Yield

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck High Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, VanEck High is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Tidal Trust III

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tidal Trust III has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tidal Trust is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with VanEck High and Tidal Trust

The main advantage of trading using opposite VanEck High and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck High 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 VanEck High Yield and Tidal Trust III 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.