Correlation Between US Treasury and Tidal Trust

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

By analyzing existing cross correlation between US Treasury 12 and Tidal Trust II, you can compare the effects of market volatilities on US Treasury 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 US Treasury with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Treasury and Tidal Trust.

Diversification Opportunities for US Treasury and Tidal Trust

-0.42

Correlation Coefficient

US Treasury  Tidal Trust

Very good diversification

The 3 months correlation between OBIL and Tidal is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding US Treasury 12 and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II and US Treasury 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 US Treasury 12 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 II has no effect on the direction of US Treasury i.e., US Treasury and Tidal Trust go up and down completely randomly.

Pair Corralation between US Treasury and Tidal Trust

Given the investment horizon of 90 days US Treasury 12 is expected to generate 0.11 times more return on investment than Tidal Trust. However, US Treasury 12 is 9.36 times less risky than Tidal Trust. It trades about 0.45 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.01 per unit of risk. If you would invest  4,967  in US Treasury 12 on December 28, 2024 and sell it today you would earn a total of  49.00  from holding US Treasury 12 or generate 0.99% return on investment over 90 days.

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

US Treasury 12  vs.  Tidal Trust II

US Treasury 12

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in US Treasury 12 are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, US Treasury is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Tidal Trust II

Risk-Adjusted Performance

Very 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 basic indicators, Tidal Trust is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with US Treasury and Tidal Trust

The main advantage of trading using opposite US Treasury and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Treasury 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 US Treasury 12 and Tidal Trust II 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.