Correlation Between Tidal ETF and Core Alternative

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

Diversification Opportunities for Tidal ETF and Core Alternative

0.96

Correlation Coefficient

Tidal ETF  Core Alternative

Almost no diversification

The 3 months correlation between Tidal and Core is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Tidal ETF Trust and Core Alternative ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Alternative ETF 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 Core Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Alternative ETF has no effect on the direction of Tidal ETF i.e., Tidal ETF and Core Alternative go up and down completely randomly.

Pair Corralation between Tidal ETF and Core Alternative

Given the investment horizon of 90 days Tidal ETF Trust is expected to under-perform the Core Alternative. In addition to that, Tidal ETF is 1.43 times more volatile than Core Alternative ETF. It trades about -0.22 of its total potential returns per unit of risk. Core Alternative ETF is currently generating about -0.18 per unit of volatility. If you would invest  2,675  in Core Alternative ETF on October 27, 2024 and sell it today you would lose (138.00) from holding Core Alternative ETF or give up 5.16% of portfolio value over 90 days.

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

Tidal ETF Trust  vs.  Core Alternative ETF

Tidal ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tidal ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Core Alternative ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Alternative ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Core Alternative 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 Tidal ETF and Core Alternative

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

The idea behind Tidal ETF Trust and Core Alternative ETF 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .