Correlation Between Tidal ETF and ETC 6

Can any of the company-specific risk be diversified away by investing in both Tidal ETF and ETC 6 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 ETC 6 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 ETC 6 Meridian, you can compare the effects of market volatilities on Tidal ETF and ETC 6 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 ETC 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal ETF and ETC 6.

Diversification Opportunities for Tidal ETF and ETC 6

-0.18

Correlation Coefficient

Tidal ETF  ETC 6

Good diversification

The 3 months correlation between Tidal and ETC is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Tidal ETF Trust and ETC 6 Meridian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETC 6 Meridian 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 ETC 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETC 6 Meridian has no effect on the direction of Tidal ETF i.e., Tidal ETF and ETC 6 go up and down completely randomly.

Pair Corralation between Tidal ETF and ETC 6

Given the investment horizon of 90 days Tidal ETF is expected to generate 12.03 times less return on investment than ETC 6. But when comparing it to its historical volatility, Tidal ETF Trust is 1.36 times less risky than ETC 6. It trades about 0.01 of its potential returns per unit of risk. ETC 6 Meridian is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,530  in ETC 6 Meridian on September 29, 2024 and sell it today you would earn a total of  165.00  from holding ETC 6 Meridian or generate 4.67% return on investment over 90 days.

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

Tidal ETF Trust  vs.  ETC 6 Meridian

Tidal ETF Trust

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Tidal ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

ETC 6 Meridian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETC 6 Meridian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, ETC 6 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 ETC 6

The main advantage of trading using opposite Tidal ETF and ETC 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal ETF position performs unexpectedly, ETC 6 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 ETC 6 will offset losses from the drop in ETC 6's long position.

The idea behind Tidal ETF Trust and ETC 6 Meridian 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.