Correlation Between GraniteShares and Tidal Trust

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

By analyzing existing cross correlation between GraniteShares 2x Long and Tidal Trust II, you can compare the effects of market volatilities on GraniteShares 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 GraniteShares with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and Tidal Trust.

Diversification Opportunities for GraniteShares and Tidal Trust

-0.36

Correlation Coefficient

GraniteShares  Tidal Trust

Very good diversification

The 3 months correlation between GraniteShares and Tidal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 2x Long 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 GraniteShares 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 GraniteShares 2x Long 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 GraniteShares i.e., GraniteShares and Tidal Trust go up and down completely randomly.

Pair Corralation between GraniteShares and Tidal Trust

Given the investment horizon of 90 days GraniteShares 2x Long is expected to generate 3.26 times more return on investment than Tidal Trust. However, GraniteShares is 3.26 times more volatile than Tidal Trust II. It trades about 0.05 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.08 per unit of risk. If you would invest  13,628  in GraniteShares 2x Long on December 30, 2024 and sell it today you would earn a total of  132.00  from holding GraniteShares 2x Long or generate 0.97% return on investment over 90 days.

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

GraniteShares 2x Long  vs.  Tidal Trust II

GraniteShares 2x Long

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 2x Long are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, GraniteShares reported solid returns over the last few months and may actually be approaching a breakup point.

Tidal Trust II

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 6 (%) 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 GraniteShares and Tidal Trust

The main advantage of trading using opposite GraniteShares and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares 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 GraniteShares 2x Long 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.