Correlation Between Tidal Trust and Multifactor

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

Diversification Opportunities for Tidal Trust and Multifactor

0.75

Correlation Coefficient

Tidal Trust  Multifactor

Poor diversification

The 3 months correlation between Tidal and Multifactor is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and Multifactor Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multifactor Equity 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 Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multifactor Equity has no effect on the direction of Tidal Trust i.e., Tidal Trust and Multifactor go up and down completely randomly.

Pair Corralation between Tidal Trust and Multifactor

Given the investment horizon of 90 days Tidal Trust II is expected to generate 1.67 times more return on investment than Multifactor. However, Tidal Trust is 1.67 times more volatile than Multifactor Equity Fund. It trades about 0.19 of its potential returns per unit of risk. Multifactor Equity Fund is currently generating about 0.19 per unit of risk. If you would invest  521.00  in Tidal Trust II on May 17, 2025 and sell it today you would earn a total of  74.00  from holding Tidal Trust II or generate 14.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Tidal Trust II  vs.  Multifactor Equity Fund

Tidal Trust II

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 15 (%) 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.

Multifactor Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multifactor Equity Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multifactor may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Tidal Trust and Multifactor

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

The idea behind Tidal Trust II and Multifactor Equity 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..