Correlation Between Tidal Trust and Vanguard Total

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

Diversification Opportunities for Tidal Trust and Vanguard Total

0.9

Correlation Coefficient

Tidal Trust  Vanguard Total

Almost no diversification

The 3 months correlation between Tidal and Vanguard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock 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 Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Tidal Trust i.e., Tidal Trust and Vanguard Total go up and down completely randomly.

Pair Corralation between Tidal Trust and Vanguard Total

Given the investment horizon of 90 days Tidal Trust II is expected to generate 26.43 times more return on investment than Vanguard Total. However, Tidal Trust is 26.43 times more volatile than Vanguard Total Stock. It trades about 0.16 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.18 per unit of risk. If you would invest  1,926  in Tidal Trust II on September 15, 2024 and sell it today you would earn a total of  5,133  from holding Tidal Trust II or generate 266.51% return on investment over 90 days.

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

Tidal Trust II  vs.  Vanguard Total Stock

Tidal Trust II

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Tidal Trust showed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Total Stock

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tidal Trust and Vanguard Total

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

The idea behind Tidal Trust II and Vanguard Total Stock 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.