Correlation Between ARK Next and SPDR SP
Can any of the company-specific risk be diversified away by investing in both ARK Next 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 Next 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 Next Generation and SPDR SP Emerging, you can compare the effects of market volatilities on ARK Next 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 Next with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and SPDR SP.
Diversification Opportunities for ARK Next and SPDR SP
Modest diversification
The 3 months correlation between ARK and SPDR is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and SPDR SP Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Emerging 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 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 Emerging has no effect on the direction of ARK Next i.e., ARK Next and SPDR SP go up and down completely randomly.
Pair Corralation between ARK Next and SPDR SP
Given the investment horizon of 90 days ARK Next Generation is expected to generate 2.56 times more return on investment than SPDR SP. However, ARK Next is 2.56 times more volatile than SPDR SP Emerging. It trades about 0.12 of its potential returns per unit of risk. SPDR SP Emerging is currently generating about 0.08 per unit of risk. If you would invest 6,978 in ARK Next Generation on September 1, 2024 and sell it today you would earn a total of 3,849 from holding ARK Next Generation or generate 55.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
ARK Next Generation vs. SPDR SP Emerging
Performance |
| Timeline |
| ARK Next Generation |
| SPDR SP Emerging |
ARK Next and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Next and SPDR SP
The main advantage of trading using opposite ARK Next and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next 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 Next vs. ARK Autonomous Technology | ARK Next vs. ARK Genomic Revolution | ARK Next vs. ARK Fintech Innovation | ARK Next vs. ARK Innovation ETF |
| SPDR SP vs. SPDR SP International | SPDR SP vs. iShares Emerging Markets | SPDR SP vs. First Trust Dow | SPDR SP vs. SPDR SP Global |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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