Correlation Between Tidal ETF and IQ Hedge

Can any of the company-specific risk be diversified away by investing in both Tidal ETF and IQ Hedge 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 IQ Hedge 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 IQ Hedge Multi Strategy, you can compare the effects of market volatilities on Tidal ETF and IQ Hedge 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 IQ Hedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal ETF and IQ Hedge.

Diversification Opportunities for Tidal ETF and IQ Hedge

0.3

Correlation Coefficient

Tidal ETF  IQ Hedge

Weak diversification

The 3 months correlation between Tidal and QAI is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tidal ETF Trust and IQ Hedge Multi Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Hedge Multi 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 IQ Hedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Hedge Multi has no effect on the direction of Tidal ETF i.e., Tidal ETF and IQ Hedge go up and down completely randomly.

Pair Corralation between Tidal ETF and IQ Hedge

Given the investment horizon of 90 days Tidal ETF is expected to generate 1.91 times less return on investment than IQ Hedge. In addition to that, Tidal ETF is 1.02 times more volatile than IQ Hedge Multi Strategy. It trades about 0.06 of its total potential returns per unit of risk. IQ Hedge Multi Strategy is currently generating about 0.11 per unit of volatility. If you would invest  2,943  in IQ Hedge Multi Strategy on September 27, 2024 and sell it today you would earn a total of  285.00  from holding IQ Hedge Multi Strategy or generate 9.68% return on investment over 90 days.

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

Tidal ETF Trust  vs.  IQ Hedge Multi Strategy

Tidal ETF Trust

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal ETF Trust are ranked lower than 1 (%) 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 newest stock price disturbance, may contribute to short-term losses for the investors.

IQ Hedge Multi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Hedge Multi Strategy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IQ Hedge is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Tidal ETF and IQ Hedge

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

The idea behind Tidal ETF Trust and IQ Hedge Multi Strategy 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.