Correlation Between Tidal ETF and ProShares Merger

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

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

Diversification Opportunities for Tidal ETF and ProShares Merger

-0.32

Correlation Coefficient

Tidal ETF  ProShares Merger

Very good diversification

The 3 months correlation between Tidal and ProShares is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Tidal ETF Trust and ProShares Merger ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Merger ETF and Tidal ETF 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 ETF Trust are associated (or correlated) with ProShares Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Merger ETF has no effect on the direction of Tidal ETF i.e., Tidal ETF and ProShares Merger go up and down completely randomly.

Pair Corralation between Tidal ETF and ProShares Merger

Given the investment horizon of 90 days Tidal ETF Trust is expected to generate 0.46 times more return on investment than ProShares Merger. However, Tidal ETF Trust is 2.2 times less risky than ProShares Merger. It trades about 0.09 of its potential returns per unit of risk. ProShares Merger ETF is currently generating about -0.21 per unit of risk. If you would invest  2,030  in Tidal ETF Trust on September 25, 2024 and sell it today you would earn a total of  10.50  from holding Tidal ETF Trust or generate 0.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Tidal ETF Trust  vs.  ProShares Merger ETF

Tidal ETF Trust

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal ETF Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Tidal ETF is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

ProShares Merger ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Merger ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, ProShares Merger is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Tidal ETF and ProShares Merger

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

The idea behind Tidal ETF Trust and ProShares Merger ETF 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.