Correlation Between Investment Managers and Tidal Trust

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

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

Diversification Opportunities for Investment Managers and Tidal Trust

0.65

Correlation Coefficient

Investment Managers  Tidal Trust

Poor diversification

The 3 months correlation between Investment and Tidal is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Investment Managers Series 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 Investment Managers 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 Investment Managers Series 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 Investment Managers i.e., Investment Managers and Tidal Trust go up and down completely randomly.

Pair Corralation between Investment Managers and Tidal Trust

Considering the 90-day investment horizon Investment Managers Series is expected to generate 3.7 times more return on investment than Tidal Trust. However, Investment Managers is 3.7 times more volatile than Tidal Trust II. It trades about 0.01 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.04 per unit of risk. If you would invest  1,437  in Investment Managers Series on December 29, 2024 and sell it today you would earn a total of  8.00  from holding Investment Managers Series or generate 0.56% return on investment over 90 days.

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

Investment Managers Series  vs.  Tidal Trust II

Investment Managers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Investment Managers Series are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Investment Managers is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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. Despite nearly stable technical and fundamental indicators, Tidal Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Investment Managers and Tidal Trust

The main advantage of trading using opposite Investment Managers and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment Managers 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 Investment Managers Series 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.