Correlation Between ARK Fintech and ARK Next
Can any of the company-specific risk be diversified away by investing in both ARK Fintech and ARK Next 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 Next 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 Next Generation, you can compare the effects of market volatilities on ARK Fintech and ARK Next 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 Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Fintech and ARK Next.
Diversification Opportunities for ARK Fintech and ARK Next
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between ARK and ARK is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding ARK Fintech Innovation and ARK Next Generation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Next Generation 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 Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Next Generation has no effect on the direction of ARK Fintech i.e., ARK Fintech and ARK Next go up and down completely randomly.
Pair Corralation between ARK Fintech and ARK Next
Given the investment horizon of 90 days ARK Fintech is expected to generate 1.01 times less return on investment than ARK Next. But when comparing it to its historical volatility, ARK Fintech Innovation is 1.06 times less risky than ARK Next. It trades about 0.1 of its potential returns per unit of risk. ARK Next Generation is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,157 in ARK Next Generation on August 28, 2024 and sell it today you would earn a total of 6,621 from holding ARK Next Generation or generate 159.27% 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 Next Generation
Performance |
| Timeline |
| ARK Fintech Innovation |
| ARK Next Generation |
ARK Fintech and ARK Next Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Fintech and ARK Next
The main advantage of trading using opposite ARK Fintech and ARK Next positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Fintech position performs unexpectedly, ARK Next 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 Next will offset losses from the drop in ARK Next'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 Next vs. Invesco DWA Utilities | ARK Next vs. Invesco Dynamic Large | ARK Next vs. Invesco Dynamic Large | ARK Next vs. HUMANA INC |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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