Correlation Between YieldMax Short and NYSE Composite

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

By analyzing existing cross correlation between YieldMax Short N100 and NYSE Composite, you can compare the effects of market volatilities on YieldMax Short and NYSE Composite 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 YieldMax Short with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of YieldMax Short and NYSE Composite.

Diversification Opportunities for YieldMax Short and NYSE Composite

-0.95

Correlation Coefficient

YieldMax Short  NYSE Composite

Pay attention - limited upside

The 3 months correlation between YieldMax and NYSE is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding YieldMax Short N100 and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and YieldMax Short 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 YieldMax Short N100 are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of YieldMax Short i.e., YieldMax Short and NYSE Composite go up and down completely randomly.

Pair Corralation between YieldMax Short and NYSE Composite

Given the investment horizon of 90 days YieldMax Short N100 is expected to under-perform the NYSE Composite. In addition to that, YieldMax Short is 1.16 times more volatile than NYSE Composite. It trades about -0.2 of its total potential returns per unit of risk. NYSE Composite is currently generating about 0.14 per unit of volatility. If you would invest  1,918,216  in NYSE Composite on May 6, 2025 and sell it today you would earn a total of  108,553  from holding NYSE Composite or generate 5.66% return on investment over 90 days.

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

YieldMax Short N100  vs.  NYSE Composite

Pair Trading with YieldMax Short and NYSE Composite

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

The idea behind YieldMax Short N100 and NYSE Composite 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.