Correlation Between ARK Next and Vanguard Extended
Can any of the company-specific risk be diversified away by investing in both ARK Next and Vanguard Extended 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 Vanguard Extended 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 Vanguard Extended Duration, you can compare the effects of market volatilities on ARK Next and Vanguard Extended 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 Vanguard Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and Vanguard Extended.
Diversification Opportunities for ARK Next and Vanguard Extended
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ARK and Vanguard is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and Vanguard Extended Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Extended 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 Vanguard Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Extended has no effect on the direction of ARK Next i.e., ARK Next and Vanguard Extended go up and down completely randomly.
Pair Corralation between ARK Next and Vanguard Extended
Given the investment horizon of 90 days ARK Next Generation is expected to generate 1.52 times more return on investment than Vanguard Extended. However, ARK Next is 1.52 times more volatile than Vanguard Extended Duration. It trades about 0.32 of its potential returns per unit of risk. Vanguard Extended Duration is currently generating about 0.07 per unit of risk. If you would invest 9,071 in ARK Next Generation on August 30, 2024 and sell it today you would earn a total of 1,680 from holding ARK Next Generation or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARK Next Generation vs. Vanguard Extended Duration
Performance |
| Timeline |
| ARK Next Generation |
| Vanguard Extended |
ARK Next and Vanguard Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Next and Vanguard Extended
The main advantage of trading using opposite ARK Next and Vanguard Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, Vanguard Extended 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 Vanguard Extended will offset losses from the drop in Vanguard Extended'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 |
| Vanguard Extended vs. Vanguard Long Term Treasury | Vanguard Extended vs. Vanguard Long Term Corporate | Vanguard Extended vs. Vanguard Long Term Bond | Vanguard Extended vs. PIMCO 25 Year |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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