Correlation Between ARK Innovation and Franklin International
Can any of the company-specific risk be diversified away by investing in both ARK Innovation and Franklin International 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 Franklin International 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 Franklin International Core, you can compare the effects of market volatilities on ARK Innovation and Franklin International 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 Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Innovation and Franklin International.
Diversification Opportunities for ARK Innovation and Franklin International
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ARK and Franklin is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding ARK Innovation ETF and Franklin International Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International 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 Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of ARK Innovation i.e., ARK Innovation and Franklin International go up and down completely randomly.
Pair Corralation between ARK Innovation and Franklin International
Given the investment horizon of 90 days ARK Innovation ETF is expected to generate 2.81 times more return on investment than Franklin International. However, ARK Innovation is 2.81 times more volatile than Franklin International Core. It trades about 0.05 of its potential returns per unit of risk. Franklin International Core is currently generating about 0.04 per unit of risk. If you would invest 4,171 in ARK Innovation ETF on August 27, 2024 and sell it today you would earn a total of 1,450 from holding ARK Innovation ETF or generate 34.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARK Innovation ETF vs. Franklin International Core
Performance |
| Timeline |
| ARK Innovation ETF |
| Franklin International |
ARK Innovation and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Innovation and Franklin International
The main advantage of trading using opposite ARK Innovation and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Innovation position performs unexpectedly, Franklin International 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 Franklin International will offset losses from the drop in Franklin International'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 |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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