Correlation Between ARK Fintech and ARK Genomic

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Can any of the company-specific risk be diversified away by investing in both ARK Fintech and ARK Genomic 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 ARK Fintech and ARK Genomic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARK Fintech Innovation and ARK Genomic Revolution, you can compare the effects of market volatilities on ARK Fintech and ARK Genomic 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 ARK Fintech with a short position of ARK Genomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Fintech and ARK Genomic.

Diversification Opportunities for ARK Fintech and ARK Genomic

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ARK and ARK is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ARK Fintech Innovation and ARK Genomic Revolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Genomic Revolution and ARK Fintech 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 ARK Fintech Innovation are associated (or correlated) with ARK Genomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Genomic Revolution has no effect on the direction of ARK Fintech i.e., ARK Fintech and ARK Genomic go up and down completely randomly.

Pair Corralation between ARK Fintech and ARK Genomic

Given the investment horizon of 90 days ARK Fintech Innovation is expected to generate 0.79 times more return on investment than ARK Genomic. However, ARK Fintech Innovation is 1.27 times less risky than ARK Genomic. It trades about 0.1 of its potential returns per unit of risk. ARK Genomic Revolution is currently generating about 0.0 per unit of risk. If you would invest  1,805  in ARK Fintech Innovation on November 2, 2024 and sell it today you would earn a total of  2,427  from holding ARK Fintech Innovation or generate 134.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

ARK Fintech Innovation  vs.  ARK Genomic Revolution

 Performance 
       Timeline  
ARK Fintech Innovation 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in ARK Fintech Innovation are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, ARK Fintech reported solid returns over the last few months and may actually be approaching a breakup point.
ARK Genomic Revolution 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in ARK Genomic Revolution are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, ARK Genomic reported solid returns over the last few months and may actually be approaching a breakup point.

ARK Fintech and ARK Genomic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ARK Fintech and ARK Genomic

The main advantage of trading using opposite ARK Fintech and ARK Genomic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Fintech position performs unexpectedly, ARK Genomic 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 ARK Genomic will offset losses from the drop in ARK Genomic's long position.
The idea behind ARK Fintech Innovation and ARK Genomic Revolution 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.
Check out your portfolio center.
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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