Correlation Between IShares MSCI and Tidal Trust

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

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

Diversification Opportunities for IShares MSCI and Tidal Trust

0.04

Correlation Coefficient

IShares MSCI  Tidal Trust

Significant diversification

The 3 months correlation between IShares and Tidal is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and Tidal Trust III in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust III and IShares MSCI 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 iShares MSCI China 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 III has no effect on the direction of IShares MSCI i.e., IShares MSCI and Tidal Trust go up and down completely randomly.

Pair Corralation between IShares MSCI and Tidal Trust

Given the investment horizon of 90 days IShares MSCI is expected to generate 301.15 times less return on investment than Tidal Trust. But when comparing it to its historical volatility, iShares MSCI China is 86.5 times less risky than Tidal Trust. It trades about 0.05 of its potential returns per unit of risk. Tidal Trust III is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Tidal Trust III on October 7, 2024 and sell it today you would earn a total of  1,997  from holding Tidal Trust III or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	13.31%
Values	Daily Returns

iShares MSCI China  vs.  Tidal Trust III

iShares MSCI China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI China has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Tidal Trust III

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust III are ranked lower than 13 (%) 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 IShares MSCI and Tidal Trust

The main advantage of trading using opposite IShares MSCI and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 iShares MSCI China and Tidal Trust III 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.