Correlation Between Tidal Trust and RiverFront Dynamic

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

Diversification Opportunities for Tidal Trust and RiverFront Dynamic

-0.58

Correlation Coefficient

Tidal Trust  RiverFront Dynamic

Excellent diversification

The 3 months correlation between Tidal and RiverFront is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and RiverFront Dynamic Flex Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverFront Dynamic Flex 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 RiverFront Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverFront Dynamic Flex has no effect on the direction of Tidal Trust i.e., Tidal Trust and RiverFront Dynamic go up and down completely randomly.

Pair Corralation between Tidal Trust and RiverFront Dynamic

Given the investment horizon of 90 days Tidal Trust II is expected to under-perform the RiverFront Dynamic. In addition to that, Tidal Trust is 1.35 times more volatile than RiverFront Dynamic Flex Cap. It trades about -0.09 of its total potential returns per unit of risk. RiverFront Dynamic Flex Cap is currently generating about 0.2 per unit of volatility. If you would invest  5,592  in RiverFront Dynamic Flex Cap on September 12, 2024 and sell it today you would earn a total of  447.00  from holding RiverFront Dynamic Flex Cap or generate 7.99% return on investment over 90 days.

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

Tidal Trust II  vs.  RiverFront Dynamic Flex Cap

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. In spite of comparatively stable technical and fundamental indicators, Tidal Trust is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

RiverFront Dynamic Flex

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RiverFront Dynamic Flex Cap are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, RiverFront Dynamic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tidal Trust and RiverFront Dynamic

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

The idea behind Tidal Trust II and RiverFront Dynamic Flex Cap 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.