Correlation Between ARK Innovation and SPDR SP
Can any of the company-specific risk be diversified away by investing in both ARK Innovation and SPDR SP 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 SPDR SP 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 SPDR SP 400, you can compare the effects of market volatilities on ARK Innovation and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Innovation and SPDR SP.
Diversification Opportunities for ARK Innovation and SPDR SP
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ARK and SPDR is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ARK Innovation ETF and SPDR SP 400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 400 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 400 has no effect on the direction of ARK Innovation i.e., ARK Innovation and SPDR SP go up and down completely randomly.
Pair Corralation between ARK Innovation and SPDR SP
Given the investment horizon of 90 days ARK Innovation ETF is expected to generate 2.0 times more return on investment than SPDR SP. However, ARK Innovation is 2.0 times more volatile than SPDR SP 400. It trades about 0.11 of its potential returns per unit of risk. SPDR SP 400 is currently generating about 0.13 per unit of risk. If you would invest 6,115 in ARK Innovation ETF on November 7, 2024 and sell it today you would earn a total of 266.00 from holding ARK Innovation ETF or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARK Innovation ETF vs. SPDR SP 400
Performance |
| Timeline |
| ARK Innovation ETF |
| SPDR SP 400 |
ARK Innovation and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Innovation and SPDR SP
The main advantage of trading using opposite ARK Innovation and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Innovation position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP'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 |
| SPDR SP vs. Invesco ESG NASDAQ | SPDR SP vs. Invesco Nasdaq Biotechnology | SPDR SP vs. Invesco Nasdaq 100 | SPDR SP vs. iShares ESG Advanced |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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