Correlation Between ARK Next and IShares GNMA
Can any of the company-specific risk be diversified away by investing in both ARK Next and IShares GNMA 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 IShares GNMA 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 iShares GNMA Bond, you can compare the effects of market volatilities on ARK Next and IShares GNMA 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 IShares GNMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and IShares GNMA.
Diversification Opportunities for ARK Next and IShares GNMA
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ARK and IShares is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and iShares GNMA Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares GNMA Bond 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 IShares GNMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares GNMA Bond has no effect on the direction of ARK Next i.e., ARK Next and IShares GNMA go up and down completely randomly.
Pair Corralation between ARK Next and IShares GNMA
Given the investment horizon of 90 days ARK Next Generation is expected to generate 5.34 times more return on investment than IShares GNMA. However, ARK Next is 5.34 times more volatile than iShares GNMA Bond. It trades about 0.12 of its potential returns per unit of risk. iShares GNMA Bond is currently generating about 0.09 per unit of risk. If you would invest 7,860 in ARK Next Generation on September 3, 2024 and sell it today you would earn a total of 2,967 from holding ARK Next Generation or generate 37.75% 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. iShares GNMA Bond
Performance |
| Timeline |
| ARK Next Generation |
| iShares GNMA Bond |
ARK Next and IShares GNMA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Next and IShares GNMA
The main advantage of trading using opposite ARK Next and IShares GNMA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, IShares GNMA 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 IShares GNMA will offset losses from the drop in IShares GNMA'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 |
| IShares GNMA vs. iShares Agency Bond | IShares GNMA vs. iShares 1 3 Year | IShares GNMA vs. iShares Core 1 5 | IShares GNMA vs. iShares Core 10 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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