Correlation Between ARK Next and ARK Innovation
Can any of the company-specific risk be diversified away by investing in both ARK Next and ARK Innovation 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 Innovation 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 Innovation ETF, you can compare the effects of market volatilities on ARK Next and ARK Innovation 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 Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and ARK Innovation.
Diversification Opportunities for ARK Next and ARK Innovation
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ARK and ARK is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and ARK Innovation ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Innovation ETF 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 Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Innovation ETF has no effect on the direction of ARK Next i.e., ARK Next and ARK Innovation go up and down completely randomly.
Pair Corralation between ARK Next and ARK Innovation
Given the investment horizon of 90 days ARK Next Generation is expected to generate 0.91 times more return on investment than ARK Innovation. However, ARK Next Generation is 1.1 times less risky than ARK Innovation. It trades about 0.1 of its potential returns per unit of risk. ARK Innovation ETF is currently generating about 0.05 per unit of risk. If you would invest 4,965 in ARK Next Generation on November 2, 2024 and sell it today you would earn a total of 7,212 from holding ARK Next Generation or generate 145.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARK Next Generation vs. ARK Innovation ETF
Performance |
| Timeline |
| ARK Next Generation |
| ARK Innovation ETF |
ARK Next and ARK Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Next and ARK Innovation
The main advantage of trading using opposite ARK Next and ARK Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, ARK Innovation 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 Innovation will offset losses from the drop in ARK Innovation's long position.| ARK Next vs. ARK Autonomous Technology | ARK Next vs. ARK Genomic Revolution | ARK Next vs. ARK Fintech Innovation | ARK Next vs. ARK Innovation ETF |
| ARK Innovation vs. iShares Dividend and | ARK Innovation vs. Martin Currie Sustainable | ARK Innovation vs. VictoryShares THB Mid | ARK Innovation vs. Mast Global Battery |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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