Correlation Between Tidal Trust and Simplify Asset

Can any of the company-specific risk be diversified away by investing in both Tidal Trust and Simplify Asset 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 Simplify Asset 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 Simplify Asset Management, you can compare the effects of market volatilities on Tidal Trust and Simplify Asset 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 Simplify Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and Simplify Asset.

Diversification Opportunities for Tidal Trust and Simplify Asset

-0.15

Correlation Coefficient

Tidal Trust  Simplify Asset

Good diversification

The 3 months correlation between Tidal and Simplify is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and Simplify Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Asset Management 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 Simplify Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Asset Management has no effect on the direction of Tidal Trust i.e., Tidal Trust and Simplify Asset go up and down completely randomly.

Pair Corralation between Tidal Trust and Simplify Asset

Given the investment horizon of 90 days Tidal Trust II is expected to generate 1.79 times more return on investment than Simplify Asset. However, Tidal Trust is 1.79 times more volatile than Simplify Asset Management. It trades about 0.38 of its potential returns per unit of risk. Simplify Asset Management is currently generating about 0.2 per unit of risk. If you would invest  3,607  in Tidal Trust II on April 30, 2025 and sell it today you would earn a total of  1,118  from holding Tidal Trust II or generate 31.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.7%
Values	Daily Returns

Tidal Trust II  vs.  Simplify Asset Management

Tidal Trust II

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Tidal Trust showed solid returns over the last few months and may actually be approaching a breakup point.

Simplify Asset Management

Risk-Adjusted Performance

Good

Over the last 90 days Simplify Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak essential indicators, Simplify Asset may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Tidal Trust and Simplify Asset

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

The idea behind Tidal Trust II and Simplify Asset Management 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.