Correlation Between Simplify Exchange and Tidal Trust

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

By analyzing existing cross correlation between Simplify Exchange Traded and Tidal Trust II, you can compare the effects of market volatilities on Simplify Exchange and Tidal Trust 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 Simplify Exchange with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Exchange and Tidal Trust.

Diversification Opportunities for Simplify Exchange and Tidal Trust

0.29

Correlation Coefficient

Simplify Exchange  Tidal Trust

Modest diversification

The 3 months correlation between Simplify and Tidal is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II and Simplify Exchange 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 Simplify Exchange Traded are associated (or correlated) with Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and Tidal Trust go up and down completely randomly.

Pair Corralation between Simplify Exchange and Tidal Trust

Considering the 90-day investment horizon Simplify Exchange Traded is expected to under-perform the Tidal Trust. In addition to that, Simplify Exchange is 6.33 times more volatile than Tidal Trust II. It trades about -0.06 of its total potential returns per unit of risk. Tidal Trust II is currently generating about -0.02 per unit of volatility. If you would invest  2,018  in Tidal Trust II on February 11, 2025 and sell it today you would lose (1.00) from holding Tidal Trust II or give up 0.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Simplify Exchange Traded  vs.  Tidal Trust II

Simplify Exchange Traded

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simplify Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Simplify Exchange is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Tidal Trust II

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tidal Trust II has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Tidal Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Simplify Exchange and Tidal Trust

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

The idea behind Simplify Exchange Traded and Tidal Trust II 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.