Correlation Between EA Series and Tidal ETF

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

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

Diversification Opportunities for EA Series and Tidal ETF

0.22

Correlation Coefficient

EA Series  Tidal ETF

Modest diversification

The 3 months correlation between STRV and Tidal is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Tidal ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal ETF Trust and EA Series 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 EA Series Trust are associated (or correlated) with Tidal ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal ETF Trust has no effect on the direction of EA Series i.e., EA Series and Tidal ETF go up and down completely randomly.

Pair Corralation between EA Series and Tidal ETF

Given the investment horizon of 90 days EA Series Trust is expected to generate 1.21 times more return on investment than Tidal ETF. However, EA Series is 1.21 times more volatile than Tidal ETF Trust. It trades about -0.05 of its potential returns per unit of risk. Tidal ETF Trust is currently generating about -0.41 per unit of risk. If you would invest  3,856  in EA Series Trust on September 24, 2024 and sell it today you would lose (33.00) from holding EA Series Trust or give up 0.86% of portfolio value over 90 days.

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

EA Series Trust  vs.  Tidal ETF Trust

EA Series Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, EA Series is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tidal ETF Trust

Risk-Adjusted Performance

0 of 100

Very 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.

Pair Trading with EA Series and Tidal ETF

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

The idea behind EA Series Trust and Tidal ETF Trust 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.