Correlation Between ARK Innovation and Alger ETF
Can any of the company-specific risk be diversified away by investing in both ARK Innovation and Alger ETF 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 Innovation and Alger ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARK Innovation ETF and The Alger ETF, you can compare the effects of market volatilities on ARK Innovation and Alger ETF 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 Innovation with a short position of Alger ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Innovation and Alger ETF.
Diversification Opportunities for ARK Innovation and Alger ETF
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ARK and Alger is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ARK Innovation ETF and The Alger ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger ETF and ARK Innovation 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 Innovation ETF are associated (or correlated) with Alger ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger ETF has no effect on the direction of ARK Innovation i.e., ARK Innovation and Alger ETF go up and down completely randomly.
Pair Corralation between ARK Innovation and Alger ETF
Given the investment horizon of 90 days ARK Innovation ETF is expected to generate 2.11 times more return on investment than Alger ETF. However, ARK Innovation is 2.11 times more volatile than The Alger ETF. It trades about 0.05 of its potential returns per unit of risk. The Alger ETF is currently generating about 0.07 per unit of risk. If you would invest 3,577 in ARK Innovation ETF on August 25, 2024 and sell it today you would earn a total of 2,044 from holding ARK Innovation ETF or generate 57.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 87.53% |
| Values | Daily Returns |
ARK Innovation ETF vs. The Alger ETF
Performance |
| Timeline |
| ARK Innovation ETF |
| Alger ETF |
ARK Innovation and Alger ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Innovation and Alger ETF
The main advantage of trading using opposite ARK Innovation and Alger ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Innovation position performs unexpectedly, Alger ETF 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 Alger ETF will offset losses from the drop in Alger ETF's long position.| ARK Innovation vs. iShares Dividend and | ARK Innovation vs. Martin Currie Sustainable | ARK Innovation vs. VictoryShares THB Mid | ARK Innovation vs. Mast Global Battery |
| Alger ETF vs. JPMorgan Fundamental Data | Alger ETF vs. Vanguard Mid Cap Index | Alger ETF vs. SPDR SP 400 | Alger ETF vs. SPDR SP 400 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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