Correlation Between Tidal ETF and IShares Core

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

By analyzing existing cross correlation between Tidal ETF Trust and iShares Core 1 5, you can compare the effects of market volatilities on Tidal ETF and IShares Core 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 ETF with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal ETF and IShares Core.

Diversification Opportunities for Tidal ETF and IShares Core

0.67

Correlation Coefficient

Tidal ETF  IShares Core

Poor diversification

The 3 months correlation between Tidal and IShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Tidal ETF Trust and iShares Core 1 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core 1 and Tidal ETF 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 ETF Trust are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core 1 has no effect on the direction of Tidal ETF i.e., Tidal ETF and IShares Core go up and down completely randomly.

Pair Corralation between Tidal ETF and IShares Core

Given the investment horizon of 90 days Tidal ETF Trust is expected to under-perform the IShares Core. In addition to that, Tidal ETF is 2.43 times more volatile than iShares Core 1 5. It trades about -0.05 of its total potential returns per unit of risk. iShares Core 1 5 is currently generating about -0.07 per unit of volatility. If you would invest  4,784  in iShares Core 1 5 on October 5, 2024 and sell it today you would lose (9.00) from holding iShares Core 1 5 or give up 0.19% of portfolio value over 90 days.

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

Tidal ETF Trust  vs.  iShares Core 1 5

Tidal ETF Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal ETF Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking indicators, Tidal ETF is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares Core 1

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core 1 5 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tidal ETF and IShares Core

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

The idea behind Tidal ETF Trust and iShares Core 1 5 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 Anywhere module to track or share privately all of your investments from the convenience of any device.