Correlation Between Tidal Trust and Invesco SP

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

Diversification Opportunities for Tidal Trust and Invesco SP

0.55

Correlation Coefficient

Tidal Trust  Invesco SP

Very weak diversification

The 3 months correlation between Tidal and Invesco is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and Invesco SP SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP SmallCap 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 Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP SmallCap has no effect on the direction of Tidal Trust i.e., Tidal Trust and Invesco SP go up and down completely randomly.

Pair Corralation between Tidal Trust and Invesco SP

Given the investment horizon of 90 days Tidal Trust II is expected to generate 1.26 times more return on investment than Invesco SP. However, Tidal Trust is 1.26 times more volatile than Invesco SP SmallCap. It trades about 0.29 of its potential returns per unit of risk. Invesco SP SmallCap is currently generating about -0.01 per unit of risk. If you would invest  484.00  in Tidal Trust II on May 5, 2025 and sell it today you would earn a total of  117.00  from holding Tidal Trust II or generate 24.17% return on investment over 90 days.

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

Tidal Trust II  vs.  Invesco SP SmallCap

Tidal Trust II

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Tidal Trust showed solid returns over the last few months and may actually be approaching a breakup point.

Invesco SP SmallCap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco SP SmallCap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Invesco SP is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tidal Trust and Invesco SP

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

The idea behind Tidal Trust II and Invesco SP SmallCap 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.