Correlation Between ARK Next and ARK Genomic
Can any of the company-specific risk be diversified away by investing in both ARK Next and ARK Genomic 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 Next and ARK Genomic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARK Next Generation and ARK Genomic Revolution, you can compare the effects of market volatilities on ARK Next and ARK Genomic 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 Next with a short position of ARK Genomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and ARK Genomic.
Diversification Opportunities for ARK Next and ARK Genomic
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARK and ARK is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and ARK Genomic Revolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Genomic Revolution and ARK Next 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 Next Generation are associated (or correlated) with ARK Genomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Genomic Revolution has no effect on the direction of ARK Next i.e., ARK Next and ARK Genomic go up and down completely randomly.
Pair Corralation between ARK Next and ARK Genomic
Given the investment horizon of 90 days ARK Next Generation is expected to generate 0.8 times more return on investment than ARK Genomic. However, ARK Next Generation is 1.25 times less risky than ARK Genomic. It trades about 0.27 of its potential returns per unit of risk. ARK Genomic Revolution is currently generating about -0.02 per unit of risk. If you would invest 7,831 in ARK Next Generation on August 28, 2024 and sell it today you would earn a total of 2,947 from holding ARK Next Generation or generate 37.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARK Next Generation vs. ARK Genomic Revolution
Performance |
| Timeline |
| ARK Next Generation |
| ARK Genomic Revolution |
ARK Next and ARK Genomic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Next and ARK Genomic
The main advantage of trading using opposite ARK Next and ARK Genomic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, ARK Genomic 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 ARK Genomic will offset losses from the drop in ARK Genomic's long position.| ARK Next vs. Invesco DWA Utilities | ARK Next vs. Invesco Dynamic Large | ARK Next vs. Invesco Dynamic Large | ARK Next vs. HUMANA INC |
| ARK Genomic vs. Global X Clean | ARK Genomic vs. Global X Renewable | ARK Genomic vs. Global X Thematic | ARK Genomic vs. Global X AgTech |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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