Correlation Between ARK Fintech and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ARK Fintech and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on ARK Fintech and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Fintech and Dow Jones.
Diversification Opportunities for ARK Fintech and Dow Jones
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARK and Dow is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ARK Fintech Innovation and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of ARK Fintech i.e., ARK Fintech and Dow Jones go up and down completely randomly.
Pair Corralation between ARK Fintech and Dow Jones
Given the investment horizon of 90 days ARK Fintech Innovation is expected to generate 2.73 times more return on investment than Dow Jones. However, ARK Fintech is 2.73 times more volatile than Dow Jones Industrial. It trades about 0.35 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of risk. If you would invest 3,705 in ARK Fintech Innovation on November 1, 2024 and sell it today you would earn a total of 527.00 from holding ARK Fintech Innovation or generate 14.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARK Fintech Innovation vs. Dow Jones Industrial
Performance |
| Timeline |
ARK Fintech and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ARK Fintech Innovation
Pair trading matchups for ARK Fintech
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ARK Fintech and Dow Jones
The main advantage of trading using opposite ARK Fintech and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Fintech position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' 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 |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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