Correlation Between ARK Autonomous and Global X
Can any of the company-specific risk be diversified away by investing in both ARK Autonomous and Global X 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 Global X 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 Global X Lithium, you can compare the effects of market volatilities on ARK Autonomous and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Autonomous and Global X.
Diversification Opportunities for ARK Autonomous and Global X
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ARK and Global is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ARK Autonomous Technology and Global X Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Lithium 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Lithium has no effect on the direction of ARK Autonomous i.e., ARK Autonomous and Global X go up and down completely randomly.
Pair Corralation between ARK Autonomous and Global X
Given the investment horizon of 90 days ARK Autonomous Technology is expected to generate 0.65 times more return on investment than Global X. However, ARK Autonomous Technology is 1.55 times less risky than Global X. It trades about 0.29 of its potential returns per unit of risk. Global X Lithium is currently generating about 0.14 per unit of risk. If you would invest 5,961 in ARK Autonomous Technology on August 26, 2024 and sell it today you would earn a total of 1,355 from holding ARK Autonomous Technology or generate 22.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARK Autonomous Technology vs. Global X Lithium
Performance |
| Timeline |
| ARK Autonomous Technology |
| Global X Lithium |
ARK Autonomous and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Autonomous and Global X
The main advantage of trading using opposite ARK Autonomous and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Autonomous position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| ARK Autonomous vs. Invesco DWA Utilities | ARK Autonomous vs. Invesco Dynamic Large | ARK Autonomous vs. Invesco Dynamic Large | ARK Autonomous vs. HUMANA INC |
| Global X vs. Invesco Solar ETF | Global X vs. Albemarle Corp | Global X vs. Lithium Americas Corp | Global X vs. iShares Global Clean |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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