Correlation Between Tidal Trust and RAYTHEON

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

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

Diversification Opportunities for Tidal Trust and RAYTHEON

0.04

Correlation Coefficient

Tidal Trust  RAYTHEON

Significant diversification

The 3 months correlation between Tidal and RAYTHEON is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and RAYTHEON TECHNOLOGIES PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAYTHEON TECHNOLOGIES and Tidal Trust 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 Trust II are associated (or correlated) with RAYTHEON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAYTHEON TECHNOLOGIES has no effect on the direction of Tidal Trust i.e., Tidal Trust and RAYTHEON go up and down completely randomly.

Pair Corralation between Tidal Trust and RAYTHEON

Given the investment horizon of 90 days Tidal Trust II is expected to generate 1.85 times more return on investment than RAYTHEON. However, Tidal Trust is 1.85 times more volatile than RAYTHEON TECHNOLOGIES PORATION. It trades about 0.01 of its potential returns per unit of risk. RAYTHEON TECHNOLOGIES PORATION is currently generating about -0.07 per unit of risk. If you would invest  2,310  in Tidal Trust II on October 26, 2024 and sell it today you would lose (4.00) from holding Tidal Trust II or give up 0.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	86.67%
Values	Daily Returns

Tidal Trust II  vs.  RAYTHEON TECHNOLOGIES PORATION

Tidal Trust II

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Tidal Trust II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Tidal Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

RAYTHEON TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RAYTHEON TECHNOLOGIES PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RAYTHEON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tidal Trust and RAYTHEON

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

The idea behind Tidal Trust II and RAYTHEON TECHNOLOGIES PORATION 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.