Correlation Between ARK Next and IShares International
Can any of the company-specific risk be diversified away by investing in both ARK Next and IShares International 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 International 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 International Dividend, you can compare the effects of market volatilities on ARK Next and IShares International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and IShares International.
Diversification Opportunities for ARK Next and IShares International
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ARK and IShares is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and iShares International Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares International has no effect on the direction of ARK Next i.e., ARK Next and IShares International go up and down completely randomly.
Pair Corralation between ARK Next and IShares International
Given the investment horizon of 90 days ARK Next Generation is expected to generate 2.35 times more return on investment than IShares International. However, ARK Next is 2.35 times more volatile than iShares International Dividend. It trades about 0.25 of its potential returns per unit of risk. iShares International Dividend is currently generating about -0.06 per unit of risk. If you would invest 10,475 in ARK Next Generation on September 12, 2024 and sell it today you would earn a total of 899.00 from holding ARK Next Generation or generate 8.58% 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 International Dividend
Performance |
| Timeline |
| ARK Next Generation |
| iShares International |
ARK Next and IShares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Next and IShares International
The main advantage of trading using opposite ARK Next and IShares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, IShares International 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 International will offset losses from the drop in IShares International'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 International vs. iShares MSCI Intl | IShares International vs. iShares MSCI Intl | IShares International vs. iShares MSCI Intl | IShares International vs. iShares Currency Hedged |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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