Correlation Between Tidal ETF and IQ Candriam

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

Diversification Opportunities for Tidal ETF and IQ Candriam

0.77

Correlation Coefficient

Tidal ETF  IQ Candriam

Poor diversification

The 3 months correlation between Tidal and IQSU is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Tidal ETF Trust and IQ Candriam ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Candriam ESG 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 IQ Candriam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Candriam ESG has no effect on the direction of Tidal ETF i.e., Tidal ETF and IQ Candriam go up and down completely randomly.

Pair Corralation between Tidal ETF and IQ Candriam

Given the investment horizon of 90 days Tidal ETF is expected to generate 2.08 times less return on investment than IQ Candriam. But when comparing it to its historical volatility, Tidal ETF Trust is 1.05 times less risky than IQ Candriam. It trades about 0.05 of its potential returns per unit of risk. IQ Candriam ESG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,432  in IQ Candriam ESG on October 25, 2024 and sell it today you would earn a total of  1,566  from holding IQ Candriam ESG or generate 45.63% return on investment over 90 days.

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

Tidal ETF Trust  vs.  IQ Candriam ESG

Tidal ETF Trust

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal ETF Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Tidal ETF is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

IQ Candriam ESG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Candriam ESG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IQ Candriam is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tidal ETF and IQ Candriam

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

The idea behind Tidal ETF Trust and IQ Candriam ESG 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.