Correlation Between Tidal Trust and IShares Consumer

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

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

Diversification Opportunities for Tidal Trust and IShares Consumer

0.01

Correlation Coefficient

Tidal Trust  IShares Consumer

Significant diversification

The 3 months correlation between Tidal and IShares is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and iShares Consumer Discretionary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Dis and Tidal Trust 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 Tidal Trust II are associated (or correlated) with IShares Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Consumer Dis has no effect on the direction of Tidal Trust i.e., Tidal Trust and IShares Consumer go up and down completely randomly.

Pair Corralation between Tidal Trust and IShares Consumer

Given the investment horizon of 90 days Tidal Trust II is expected to generate 0.39 times more return on investment than IShares Consumer. However, Tidal Trust II is 2.55 times less risky than IShares Consumer. It trades about 0.4 of its potential returns per unit of risk. iShares Consumer Discretionary is currently generating about 0.13 per unit of risk. If you would invest  2,259  in Tidal Trust II on February 15, 2024 and sell it today you would earn a total of  68.00  from holding Tidal Trust II or generate 3.01% return on investment over 90 days.

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

Tidal Trust II  vs.  iShares Consumer Discretionary

Tidal Trust II

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Tidal Trust may actually be approaching a critical reversion point that can send shares even higher in June 2024.

iShares Consumer Dis

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Consumer Discretionary are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IShares Consumer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tidal Trust and IShares Consumer

The main advantage of trading using opposite Tidal Trust and IShares Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, IShares Consumer 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 IShares Consumer will offset losses from the drop in IShares Consumer's long position.

The idea behind Tidal Trust II and iShares Consumer Discretionary 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.