Correlation Between Tidal Trust and Tidal Investments

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

By analyzing existing cross correlation between Tidal Trust III and Tidal Investments, you can compare the effects of market volatilities on Tidal Trust and Tidal Investments 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 Tidal Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and Tidal Investments.

Diversification Opportunities for Tidal Trust and Tidal Investments

-0.3

Correlation Coefficient

Tidal Trust  Tidal Investments

Very good diversification

The 3 months correlation between Tidal and Tidal is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust III and Tidal Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Investments 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 III are associated (or correlated) with Tidal Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Investments has no effect on the direction of Tidal Trust i.e., Tidal Trust and Tidal Investments go up and down completely randomly.

Pair Corralation between Tidal Trust and Tidal Investments

Given the investment horizon of 90 days Tidal Trust III is expected to under-perform the Tidal Investments. In addition to that, Tidal Trust is 10.14 times more volatile than Tidal Investments. It trades about -0.03 of its total potential returns per unit of risk. Tidal Investments is currently generating about 0.1 per unit of volatility. If you would invest  2,093  in Tidal Investments on May 26, 2025 and sell it today you would earn a total of  18.00  from holding Tidal Investments or generate 0.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	23.81%
Values	Daily Returns

Tidal Trust III  vs.  Tidal Investments

Tidal Trust III

Risk-Adjusted Performance

Weakest

Over the last 90 days Tidal Trust III has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Tidal Investments

Risk-Adjusted Performance

Fair

Over the last 90 days Tidal Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tidal Investments is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Tidal Trust and Tidal Investments

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

The idea behind Tidal Trust III and Tidal Investments 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.