Correlation Between Virtus WMC and Tidal Trust

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

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

Diversification Opportunities for Virtus WMC and Tidal Trust

-0.67

Correlation Coefficient

Virtus WMC  Tidal Trust

Excellent diversification

The 3 months correlation between Virtus and Tidal is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Virtus WMC International 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 Virtus WMC 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 Virtus WMC International 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 Virtus WMC i.e., Virtus WMC and Tidal Trust go up and down completely randomly.

Pair Corralation between Virtus WMC and Tidal Trust

Given the investment horizon of 90 days Virtus WMC International is expected to generate 0.82 times more return on investment than Tidal Trust. However, Virtus WMC International is 1.22 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 -0.16 per unit of risk. If you would invest  2,692  in Virtus WMC International on October 22, 2024 and sell it today you would earn a total of  1.30  from holding Virtus WMC International or generate 0.05% return on investment over 90 days.

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

Virtus WMC International  vs.  Tidal Trust II

Virtus WMC International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus WMC International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Virtus WMC is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Tidal Trust II

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Tidal Trust may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Virtus WMC and Tidal Trust

The main advantage of trading using opposite Virtus WMC and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus WMC 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 Virtus WMC International 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.