Correlation Between Saba Capital and Tidal Trust

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

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

Diversification Opportunities for Saba Capital and Tidal Trust

0.56

Correlation Coefficient

Saba Capital  Tidal Trust

Very weak diversification

The 3 months correlation between Saba and Tidal is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Saba Capital Income 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 Saba Capital 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 Saba Capital Income 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 Saba Capital i.e., Saba Capital and Tidal Trust go up and down completely randomly.

Pair Corralation between Saba Capital and Tidal Trust

Given the investment horizon of 90 days Saba Capital Income is expected to generate 0.18 times more return on investment than Tidal Trust. However, Saba Capital Income is 5.59 times less risky than Tidal Trust. It trades about 0.14 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.18 per unit of risk. If you would invest  692.00  in Saba Capital Income on October 14, 2024 and sell it today you would earn a total of  206.00  from holding Saba Capital Income or generate 29.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	8.87%
Values	Daily Returns

Saba Capital Income  vs.  Tidal Trust II

Saba Capital Income

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saba Capital Income are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, Saba Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tidal Trust II

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Saba Capital and Tidal Trust

The main advantage of trading using opposite Saba Capital and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saba Capital 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 Saba Capital Income 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.