Correlation Between ARK Fintech and ARK Innovation
Can any of the company-specific risk be diversified away by investing in both ARK Fintech and ARK Innovation 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 Innovation 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 Innovation ETF, you can compare the effects of market volatilities on ARK Fintech and ARK Innovation 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 Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Fintech and ARK Innovation.
Diversification Opportunities for ARK Fintech and ARK Innovation
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ARK and ARK is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding ARK Fintech Innovation and ARK Innovation ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Innovation ETF 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 Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Innovation ETF has no effect on the direction of ARK Fintech i.e., ARK Fintech and ARK Innovation go up and down completely randomly.
Pair Corralation between ARK Fintech and ARK Innovation
Given the investment horizon of 90 days ARK Fintech Innovation is expected to generate 0.87 times more return on investment than ARK Innovation. However, ARK Fintech Innovation is 1.14 times less risky than ARK Innovation. It trades about 0.1 of its potential returns per unit of risk. ARK Innovation ETF is currently generating about 0.06 per unit of risk. If you would invest 1,503 in ARK Fintech Innovation on August 28, 2024 and sell it today you would earn a total of 2,418 from holding ARK Fintech Innovation or generate 160.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARK Fintech Innovation vs. ARK Innovation ETF
Performance |
| Timeline |
| ARK Fintech Innovation |
| ARK Innovation ETF |
ARK Fintech and ARK Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Fintech and ARK Innovation
The main advantage of trading using opposite ARK Fintech and ARK Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Fintech position performs unexpectedly, ARK Innovation 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 Innovation will offset losses from the drop in ARK Innovation's long position.| ARK Fintech vs. ARK Autonomous Technology | ARK Fintech vs. ARK Next Generation | ARK Fintech vs. ARK Genomic Revolution | ARK Fintech vs. ARK Innovation ETF |
| ARK Innovation vs. iShares Dividend and | ARK Innovation vs. Martin Currie Sustainable | ARK Innovation vs. VictoryShares THB Mid | ARK Innovation vs. Mast Global Battery |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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