Correlation Between Listed Funds and Tidal Commodities

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

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

Diversification Opportunities for Listed Funds and Tidal Commodities

-0.74

Correlation Coefficient

Listed Funds  Tidal Commodities

Pay attention - limited upside

The 3 months correlation between Listed and Tidal is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Listed Funds Trust and Tidal Commodities Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Commodities Trust and Listed Funds 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 Listed Funds Trust are associated (or correlated) with Tidal Commodities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Commodities Trust has no effect on the direction of Listed Funds i.e., Listed Funds and Tidal Commodities go up and down completely randomly.

Pair Corralation between Listed Funds and Tidal Commodities

Given the investment horizon of 90 days Listed Funds Trust is expected to under-perform the Tidal Commodities. But the etf apears to be less risky and, when comparing its historical volatility, Listed Funds Trust is 5.3 times less risky than Tidal Commodities. The etf trades about -0.02 of its potential returns per unit of risk. The Tidal Commodities Trust is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  6,613  in Tidal Commodities Trust on September 14, 2024 and sell it today you would earn a total of  4,768  from holding Tidal Commodities Trust or generate 72.1% return on investment over 90 days.

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

Listed Funds Trust  vs.  Tidal Commodities Trust

Listed Funds Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Listed Funds Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Listed Funds is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Tidal Commodities Trust

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Commodities Trust are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Tidal Commodities demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Listed Funds and Tidal Commodities

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

The idea behind Listed Funds Trust and Tidal Commodities 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.