Correlation Between Tidal ETF and SPDR SP

Can any of the company-specific risk be diversified away by investing in both Tidal ETF and SPDR 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 ETF and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tidal ETF Services and SPDR SP Global, you can compare the effects of market volatilities on Tidal ETF and SPDR 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 ETF with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal ETF and SPDR SP.

Diversification Opportunities for Tidal ETF and SPDR SP

0.58

Correlation Coefficient

Tidal ETF  SPDR SP

Very weak diversification

The 3 months correlation between Tidal and SPDR is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tidal ETF Services and SPDR SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Global and Tidal ETF 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 ETF Services are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Global has no effect on the direction of Tidal ETF i.e., Tidal ETF and SPDR SP go up and down completely randomly.

Pair Corralation between Tidal ETF and SPDR SP

Given the investment horizon of 90 days Tidal ETF Services is expected to under-perform the SPDR SP. In addition to that, Tidal ETF is 1.3 times more volatile than SPDR SP Global. It trades about 0.0 of its total potential returns per unit of risk. SPDR SP Global is currently generating about 0.07 per unit of volatility. If you would invest  5,175  in SPDR SP Global on February 13, 2025 and sell it today you would earn a total of  1,570  from holding SPDR SP Global or generate 30.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.27%
Values	Daily Returns

Tidal ETF Services  vs.  SPDR SP Global

Tidal ETF Services

Risk-Adjusted Performance

Very Strong

Over the last 90 days Tidal ETF Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unfluctuating basic indicators, Tidal ETF exhibited solid returns over the last few months and may actually be approaching a breakup point.

SPDR SP Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Global are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Tidal ETF and SPDR SP

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

The idea behind Tidal ETF Services and SPDR SP Global 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.