Correlation Between Via Renewables and Tidal Trust

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

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

Diversification Opportunities for Via Renewables and Tidal Trust

-0.32

Correlation Coefficient

Via Renewables  Tidal Trust

Very good diversification

The 3 months correlation between Via and Tidal is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables 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 Via Renewables 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 Via Renewables 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 Via Renewables i.e., Via Renewables and Tidal Trust go up and down completely randomly.

Pair Corralation between Via Renewables and Tidal Trust

Assuming the 90 days horizon Via Renewables is expected to generate 0.4 times more return on investment than Tidal Trust. However, Via Renewables is 2.52 times less risky than Tidal Trust. It trades about 0.27 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.03 per unit of risk. If you would invest  2,234  in Via Renewables on September 22, 2024 and sell it today you would earn a total of  101.00  from holding Via Renewables or generate 4.52% return on investment over 90 days.

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

Via Renewables  vs.  Tidal Trust II

Via Renewables

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 rather sound basic indicators, Tidal Trust is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Via Renewables and Tidal Trust

The main advantage of trading using opposite Via Renewables and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Via Renewables 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 Via Renewables 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.