Correlation Between Proshares Russell and Tidal Trust

Can any of the company-specific risk be diversified away by investing in both Proshares Russell 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 Russell 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 Russell 2000 and Tidal Trust II, you can compare the effects of market volatilities on Proshares Russell 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 Russell with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proshares Russell and Tidal Trust.

Diversification Opportunities for Proshares Russell and Tidal Trust

-0.56

Correlation Coefficient

Proshares Russell  Tidal Trust

Excellent diversification

The 3 months correlation between Proshares and Tidal is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Proshares Russell 2000 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 Russell 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 Russell 2000 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 Russell i.e., Proshares Russell and Tidal Trust go up and down completely randomly.

Pair Corralation between Proshares Russell and Tidal Trust

Given the investment horizon of 90 days Proshares Russell is expected to generate 13.21 times less return on investment than Tidal Trust. In addition to that, Proshares Russell is 1.58 times more volatile than Tidal Trust II. It trades about 0.0 of its total potential returns per unit of risk. Tidal Trust II is currently generating about 0.08 per unit of volatility. If you would invest  1,085  in Tidal Trust II on December 29, 2024 and sell it today you would earn a total of  160.00  from holding Tidal Trust II or generate 14.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Proshares Russell 2000  vs.  Tidal Trust II

Proshares Russell 2000

Risk-Adjusted Performance

Very Weak

Over the last 90 days Proshares Russell 2000 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Proshares Russell is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Tidal Trust II

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Tidal Trust unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Proshares Russell and Tidal Trust

The main advantage of trading using opposite Proshares Russell and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proshares Russell 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 Russell 2000 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.