Correlation Between ARK Autonomous and First Trust
Can any of the company-specific risk be diversified away by investing in both ARK Autonomous and First Trust 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 Autonomous and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARK Autonomous Technology and First Trust Dow, you can compare the effects of market volatilities on ARK Autonomous and First Trust 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 Autonomous with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Autonomous and First Trust.
Diversification Opportunities for ARK Autonomous and First Trust
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ARK and First is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding ARK Autonomous Technology and First Trust Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Dow and ARK Autonomous 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 Autonomous Technology are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Dow has no effect on the direction of ARK Autonomous i.e., ARK Autonomous and First Trust go up and down completely randomly.
Pair Corralation between ARK Autonomous and First Trust
Given the investment horizon of 90 days ARK Autonomous is expected to generate 1.29 times less return on investment than First Trust. In addition to that, ARK Autonomous is 1.17 times more volatile than First Trust Dow. It trades about 0.06 of its total potential returns per unit of risk. First Trust Dow is currently generating about 0.09 per unit of volatility. If you would invest 13,252 in First Trust Dow on August 23, 2024 and sell it today you would earn a total of 10,592 from holding First Trust Dow or generate 79.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARK Autonomous Technology vs. First Trust Dow
Performance |
| Timeline |
| ARK Autonomous Technology |
| First Trust Dow |
ARK Autonomous and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Autonomous and First Trust
The main advantage of trading using opposite ARK Autonomous and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Autonomous position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| ARK Autonomous vs. ARK Fintech Innovation | ARK Autonomous vs. ARK Next Generation | ARK Autonomous vs. ARK Genomic Revolution | ARK Autonomous vs. ARK Innovation ETF |
| First Trust vs. First Trust Cloud | First Trust vs. iShares Expanded Tech Software | First Trust vs. Invesco NASDAQ Internet | First Trust vs. First Trust NASDAQ 100 Technology |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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