Correlation Between ARK Next and IShares 1
Can any of the company-specific risk be diversified away by investing in both ARK Next and IShares 1 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 1 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 1 5 Year, you can compare the effects of market volatilities on ARK Next and IShares 1 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 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and IShares 1.
Diversification Opportunities for ARK Next and IShares 1
Very good diversification
The 3 months correlation between ARK and IShares is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and iShares 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 1 5 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 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 1 5 has no effect on the direction of ARK Next i.e., ARK Next and IShares 1 go up and down completely randomly.
Pair Corralation between ARK Next and IShares 1
Given the investment horizon of 90 days ARK Next Generation is expected to generate 16.07 times more return on investment than IShares 1. However, ARK Next is 16.07 times more volatile than iShares 1 5 Year. It trades about 0.32 of its potential returns per unit of risk. iShares 1 5 Year 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARK Next Generation vs. iShares 1 5 Year
Performance |
| Timeline |
| ARK Next Generation |
| iShares 1 5 |
ARK Next and IShares 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Next and IShares 1
The main advantage of trading using opposite ARK Next and IShares 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, IShares 1 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 1 will offset losses from the drop in IShares 1'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 1 vs. iShares 5 10 Year | IShares 1 vs. iShares 0 5 Year | IShares 1 vs. SPDR Barclays Short | IShares 1 vs. iShares Core Total |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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