Correlation Between Tidal Trust and Texas Capital

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

Diversification Opportunities for Tidal Trust and Texas Capital

-0.93

Correlation Coefficient

Tidal Trust  Texas Capital

Pay attention - limited upside

The 3 months correlation between Tidal and Texas is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and Texas Capital Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Funds 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 Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Funds has no effect on the direction of Tidal Trust i.e., Tidal Trust and Texas Capital go up and down completely randomly.

Pair Corralation between Tidal Trust and Texas Capital

Given the investment horizon of 90 days Tidal Trust II is expected to under-perform the Texas Capital. In addition to that, Tidal Trust is 17.37 times more volatile than Texas Capital Funds. It trades about -0.18 of its total potential returns per unit of risk. Texas Capital Funds is currently generating about 0.78 per unit of volatility. If you would invest  9,923  in Texas Capital Funds on February 3, 2025 and sell it today you would earn a total of  95.00  from holding Texas Capital Funds or generate 0.96% return on investment over 90 days.

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

Tidal Trust II  vs.  Texas Capital Funds

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 fairly strong basic indicators, Tidal Trust is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Texas Capital Funds

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Capital Funds are ranked lower than 61 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Texas Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tidal Trust and Texas Capital

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

The idea behind Tidal Trust II and Texas Capital Funds 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.