Correlation Between Tidal Trust and 50249AAD5

Can any of the company-specific risk be diversified away by investing in both Tidal Trust and 50249AAD5 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 50249AAD5 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 LYB INTERNATIONAL FINANCE, you can compare the effects of market volatilities on Tidal Trust and 50249AAD5 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 50249AAD5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and 50249AAD5.

Diversification Opportunities for Tidal Trust and 50249AAD5

-0.39

Correlation Coefficient

Tidal Trust  50249AAD5

Very good diversification

The 3 months correlation between Tidal and 50249AAD5 is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and LYB INTERNATIONAL FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYB INTERNATIONAL FINANCE 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 50249AAD5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYB INTERNATIONAL FINANCE has no effect on the direction of Tidal Trust i.e., Tidal Trust and 50249AAD5 go up and down completely randomly.

Pair Corralation between Tidal Trust and 50249AAD5

Given the investment horizon of 90 days Tidal Trust is expected to generate 13.23 times less return on investment than 50249AAD5. But when comparing it to its historical volatility, Tidal Trust II is 1.57 times less risky than 50249AAD5. It trades about 0.03 of its potential returns per unit of risk. LYB INTERNATIONAL FINANCE is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  7,476  in LYB INTERNATIONAL FINANCE on October 26, 2024 and sell it today you would earn a total of  795.00  from holding LYB INTERNATIONAL FINANCE or generate 10.63% return on investment over 90 days.

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

Tidal Trust II  vs.  LYB INTERNATIONAL FINANCE

Tidal Trust II

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 10 (%) 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.

LYB INTERNATIONAL FINANCE

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LYB INTERNATIONAL FINANCE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, 50249AAD5 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tidal Trust and 50249AAD5

The main advantage of trading using opposite Tidal Trust and 50249AAD5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, 50249AAD5 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 50249AAD5 will offset losses from the drop in 50249AAD5's long position.

The idea behind Tidal Trust II and LYB INTERNATIONAL FINANCE 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.