Correlation Between Leverage Shares and Tidal Trust

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

By analyzing existing cross correlation between Leverage Shares 2X and Tidal Trust II, you can compare the effects of market volatilities on Leverage Shares and Tidal Trust 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 Leverage Shares with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Tidal Trust.

Diversification Opportunities for Leverage Shares and Tidal Trust

0.21

Correlation Coefficient

Leverage Shares  Tidal Trust

Modest diversification

The 3 months correlation between Leverage and Tidal is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2X and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II and Leverage Shares 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 Leverage Shares 2X are associated (or correlated) with Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of Leverage Shares i.e., Leverage Shares and Tidal Trust go up and down completely randomly.

Pair Corralation between Leverage Shares and Tidal Trust

Given the investment horizon of 90 days Leverage Shares 2X is expected to under-perform the Tidal Trust. But the etf apears to be less risky and, when comparing its historical volatility, Leverage Shares 2X is 10.72 times less risky than Tidal Trust. The etf trades about -0.05 of its potential returns per unit of risk. The Tidal Trust II is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Tidal Trust II on October 26, 2024 and sell it today you would earn a total of  1,212  from holding Tidal Trust II or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	21.09%
Values	Daily Returns

Leverage Shares 2X  vs.  Tidal Trust II

Leverage Shares 2X

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leverage Shares 2X has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Tidal Trust II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tidal Trust II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tidal Trust is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Leverage Shares and Tidal Trust

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

The idea behind Leverage Shares 2X and Tidal Trust II 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.