Correlation Between Vanguard Mid and Tidal Trust

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

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

Diversification Opportunities for Vanguard Mid and Tidal Trust

0.08

Correlation Coefficient

Vanguard Mid  Tidal Trust

Significant diversification

The 3 months correlation between Vanguard and Tidal is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index 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 Vanguard Mid 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 Vanguard Mid Cap Index 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 Vanguard Mid i.e., Vanguard Mid and Tidal Trust go up and down completely randomly.

Pair Corralation between Vanguard Mid and Tidal Trust

Allowing for the 90-day total investment horizon Vanguard Mid Cap Index is expected to under-perform the Tidal Trust. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Mid Cap Index is 3.65 times less risky than Tidal Trust. The etf trades about -0.1 of its potential returns per unit of risk. The Tidal Trust II is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,226  in Tidal Trust II on November 28, 2024 and sell it today you would lose (29.00) from holding Tidal Trust II or give up 2.37% of portfolio value over 90 days.

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

Vanguard Mid Cap Index  vs.  Tidal Trust II

Vanguard Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Mid Cap Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vanguard Mid is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Tidal Trust II

Risk-Adjusted Performance

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 Vanguard Mid and Tidal Trust

The main advantage of trading using opposite Vanguard Mid and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid 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 Vanguard Mid Cap Index 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.