Correlation Between Vanguard Value and Tidal Trust

Can any of the company-specific risk be diversified away by investing in both Vanguard Value 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 Value 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 Value Index and Tidal Trust II, you can compare the effects of market volatilities on Vanguard Value 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 Value with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and Tidal Trust.

Diversification Opportunities for Vanguard Value and Tidal Trust

-0.16

Correlation Coefficient

Vanguard Value  Tidal Trust

Good diversification

The 3 months correlation between Vanguard and Tidal is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value 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 Value 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 Value 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 Value i.e., Vanguard Value and Tidal Trust go up and down completely randomly.

Pair Corralation between Vanguard Value and Tidal Trust

Considering the 90-day investment horizon Vanguard Value Index is expected to generate 0.16 times more return on investment than Tidal Trust. However, Vanguard Value Index is 6.35 times less risky than Tidal Trust. It trades about -0.01 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.13 per unit of risk. If you would invest  17,239  in Vanguard Value Index on September 26, 2024 and sell it today you would lose (109.00) from holding Vanguard Value Index or give up 0.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	19.05%
Values	Daily Returns

Vanguard Value Index  vs.  Tidal Trust II

Vanguard Value Index

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 uncertain performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Vanguard Value and Tidal Trust

The main advantage of trading using opposite Vanguard Value and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value 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 Value 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.