Correlation Between Global X and Tidal Trust

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

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

Diversification Opportunities for Global X and Tidal Trust

0.93

Correlation Coefficient

Global X  Tidal Trust

Almost no diversification

The 3 months correlation between Global and Tidal is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Global X SP 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 Global X 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 Global X SP 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 Global X i.e., Global X and Tidal Trust go up and down completely randomly.

Pair Corralation between Global X and Tidal Trust

Given the investment horizon of 90 days Global X is expected to generate 3.17 times less return on investment than Tidal Trust. But when comparing it to its historical volatility, Global X SP is 3.54 times less risky than Tidal Trust. It trades about 0.11 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,212  in Tidal Trust II on September 4, 2024 and sell it today you would earn a total of  657.00  from holding Tidal Trust II or generate 54.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	60.61%
Values	Daily Returns

Global X SP  vs.  Tidal Trust II

Global X SP

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SP are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Global X is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Tidal Trust II

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Tidal Trust showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and Tidal Trust

The main advantage of trading using opposite Global X and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X SP 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.