Correlation Between Tidal Trust and GraniteShares

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Can any of the company-specific risk be diversified away by investing in both Tidal Trust and GraniteShares 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 GraniteShares 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 GraniteShares 2x Long, you can compare the effects of market volatilities on Tidal Trust and GraniteShares 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 GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and GraniteShares.

Diversification Opportunities for Tidal Trust and GraniteShares

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Tidal and GraniteShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and GraniteShares 2x Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 2x Long 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 GraniteShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 2x Long has no effect on the direction of Tidal Trust i.e., Tidal Trust and GraniteShares go up and down completely randomly.

Pair Corralation between Tidal Trust and GraniteShares

Given the investment horizon of 90 days Tidal Trust II is expected to generate 0.2 times more return on investment than GraniteShares. However, Tidal Trust II is 4.96 times less risky than GraniteShares. It trades about 0.03 of its potential returns per unit of risk. GraniteShares 2x Long is currently generating about -0.02 per unit of risk. If you would invest  1,475  in Tidal Trust II on July 7, 2024 and sell it today you would earn a total of  149.00  from holding Tidal Trust II or generate 10.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy50.18%
ValuesDaily Returns

Tidal Trust II  vs.  GraniteShares 2x Long

 Performance 
       Timeline  
Tidal Trust II 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tidal Trust II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Tidal Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
GraniteShares 2x Long 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GraniteShares 2x Long has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, GraniteShares is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Tidal Trust and GraniteShares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tidal Trust and GraniteShares

The main advantage of trading using opposite Tidal Trust and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, GraniteShares 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 GraniteShares will offset losses from the drop in GraniteShares' long position.
The idea behind Tidal Trust II and GraniteShares 2x Long 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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