Correlation Between ARK Next and IShares Convertible
Can any of the company-specific risk be diversified away by investing in both ARK Next and IShares Convertible 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 Convertible 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 Convertible Bond, you can compare the effects of market volatilities on ARK Next and IShares Convertible 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 Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and IShares Convertible.
Diversification Opportunities for ARK Next and IShares Convertible
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ARK and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and iShares Convertible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Convertible 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 Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Convertible Bond has no effect on the direction of ARK Next i.e., ARK Next and IShares Convertible go up and down completely randomly.
Pair Corralation between ARK Next and IShares Convertible
Given the investment horizon of 90 days ARK Next Generation is expected to generate 3.72 times more return on investment than IShares Convertible. However, ARK Next is 3.72 times more volatile than iShares Convertible Bond. It trades about 0.15 of its potential returns per unit of risk. iShares Convertible Bond is currently generating about 0.21 per unit of risk. If you would invest 7,540 in ARK Next Generation on September 1, 2024 and sell it today you would earn a total of 3,287 from holding ARK Next Generation or generate 43.59% 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. iShares Convertible Bond
Performance |
| Timeline |
| ARK Next Generation |
| iShares Convertible Bond |
ARK Next and IShares Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Next and IShares Convertible
The main advantage of trading using opposite ARK Next and IShares Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, IShares Convertible 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 Convertible will offset losses from the drop in IShares Convertible'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 Convertible vs. VanEck Vectors Moodys | IShares Convertible vs. BondBloxx ETF Trust | IShares Convertible vs. Vanguard ESG Corporate | IShares Convertible vs. Vanguard Intermediate Term Corporate |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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