Correlation Between Tidal Trust and Moderate Strategy

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

Diversification Opportunities for Tidal Trust and Moderate Strategy

0.97

Correlation Coefficient

Tidal Trust  Moderate Strategy

Almost no diversification

The 3 months correlation between Tidal and Moderate is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and Moderate Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderate Strategy 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 Moderate Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderate Strategy has no effect on the direction of Tidal Trust i.e., Tidal Trust and Moderate Strategy go up and down completely randomly.

Pair Corralation between Tidal Trust and Moderate Strategy

Given the investment horizon of 90 days Tidal Trust II is expected to generate 3.75 times more return on investment than Moderate Strategy. However, Tidal Trust is 3.75 times more volatile than Moderate Strategy Fund. It trades about 0.31 of its potential returns per unit of risk. Moderate Strategy Fund is currently generating about 0.24 per unit of risk. If you would invest  495.00  in Tidal Trust II on May 2, 2025 and sell it today you would earn a total of  127.00  from holding Tidal Trust II or generate 25.66% return on investment over 90 days.

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

Tidal Trust II  vs.  Moderate Strategy Fund

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 24 (%) 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.

Moderate Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Moderate Strategy Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Moderate Strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tidal Trust and Moderate Strategy

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

The idea behind Tidal Trust II and Moderate Strategy Fund 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.