Correlation Between Strategy Shares and Tidal Trust

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

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

Diversification Opportunities for Strategy Shares and Tidal Trust

-0.02

Correlation Coefficient

Strategy Shares  Tidal Trust

Good diversification

The 3 months correlation between Strategy and Tidal is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares 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 Strategy Shares 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 Strategy Shares 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 Strategy Shares i.e., Strategy Shares and Tidal Trust go up and down completely randomly.

Pair Corralation between Strategy Shares and Tidal Trust

Given the investment horizon of 90 days Strategy Shares is expected to generate 61.27 times more return on investment than Tidal Trust. However, Strategy Shares is 61.27 times more volatile than Tidal Trust II. It trades about 0.13 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.11 per unit of risk. If you would invest  0.00  in Strategy Shares on February 3, 2025 and sell it today you would earn a total of  2,450  from holding Strategy Shares or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.5%
Values	Daily Returns

Strategy Shares  vs.  Tidal Trust II

Strategy Shares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strategy Shares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Strategy Shares sustained solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of uncertain performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Strategy Shares and Tidal Trust

The main advantage of trading using opposite Strategy Shares and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategy Shares 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 Strategy Shares 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.