Correlation Between ARK Innovation and Alger Mid
Can any of the company-specific risk be diversified away by investing in both ARK Innovation and Alger Mid 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 Mid 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 Alger Mid Cap, you can compare the effects of market volatilities on ARK Innovation and Alger Mid 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 Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Innovation and Alger Mid.
Diversification Opportunities for ARK Innovation and Alger Mid
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ARK and Alger is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding ARK Innovation ETF and Alger Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Mid Cap 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 Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Mid Cap has no effect on the direction of ARK Innovation i.e., ARK Innovation and Alger Mid go up and down completely randomly.
Pair Corralation between ARK Innovation and Alger Mid
Given the investment horizon of 90 days ARK Innovation is expected to generate 3.25 times less return on investment than Alger Mid. In addition to that, ARK Innovation is 1.55 times more volatile than Alger Mid Cap. It trades about 0.02 of its total potential returns per unit of risk. Alger Mid Cap is currently generating about 0.13 per unit of volatility. If you would invest 1,348 in Alger Mid Cap on August 25, 2024 and sell it today you would earn a total of 645.00 from holding Alger Mid Cap or generate 47.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARK Innovation ETF vs. Alger Mid Cap
Performance |
| Timeline |
| ARK Innovation ETF |
| Alger Mid Cap |
ARK Innovation and Alger Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Innovation and Alger Mid
The main advantage of trading using opposite ARK Innovation and Alger Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Innovation position performs unexpectedly, Alger Mid 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 Mid will offset losses from the drop in Alger Mid'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 Mid vs. Alger 35 ETF | Alger Mid vs. Invesco SP MidCap | Alger Mid vs. Inspire Faithward Mid | Alger Mid vs. Gabelli ETFs Trust |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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