Correlation Between ARK Fintech and ARK Space
Can any of the company-specific risk be diversified away by investing in both ARK Fintech and ARK Space 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 Space 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 Space Exploration, you can compare the effects of market volatilities on ARK Fintech and ARK Space 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 Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Fintech and ARK Space.
Diversification Opportunities for ARK Fintech and ARK Space
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ARK and ARK is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ARK Fintech Innovation and ARK Space Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Space Exploration 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 Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Space Exploration has no effect on the direction of ARK Fintech i.e., ARK Fintech and ARK Space go up and down completely randomly.
Pair Corralation between ARK Fintech and ARK Space
Given the investment horizon of 90 days ARK Fintech Innovation is expected to generate 1.52 times more return on investment than ARK Space. However, ARK Fintech is 1.52 times more volatile than ARK Space Exploration. It trades about 0.1 of its potential returns per unit of risk. ARK Space Exploration is currently generating about 0.06 per unit of risk. If you would invest 1,852 in ARK Fintech Innovation on August 24, 2024 and sell it today you would earn a total of 2,031 from holding ARK Fintech Innovation or generate 109.67% 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 Space Exploration
Performance |
| Timeline |
| ARK Fintech Innovation |
| ARK Space Exploration |
ARK Fintech and ARK Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Fintech and ARK Space
The main advantage of trading using opposite ARK Fintech and ARK Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Fintech position performs unexpectedly, ARK Space 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 Space will offset losses from the drop in ARK Space's long position.| ARK Fintech vs. Invesco DWA Utilities | ARK Fintech vs. Invesco Dynamic Large | ARK Fintech vs. Invesco Dynamic Large | ARK Fintech vs. HUMANA INC |
| ARK Space vs. Vanguard Mid Cap Growth | ARK Space vs. ARK Innovation ETF | ARK Space vs. iShares Morningstar Mid Cap | ARK Space vs. SPDR Kensho New |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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