Correlation Between ARK Next and Rayliant Quantamental
Can any of the company-specific risk be diversified away by investing in both ARK Next and Rayliant Quantamental 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 Rayliant Quantamental 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 Rayliant Quantamental China, you can compare the effects of market volatilities on ARK Next and Rayliant Quantamental 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 Rayliant Quantamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and Rayliant Quantamental.
Diversification Opportunities for ARK Next and Rayliant Quantamental
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARK and Rayliant is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and Rayliant Quantamental China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayliant Quantamental 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 Rayliant Quantamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayliant Quantamental has no effect on the direction of ARK Next i.e., ARK Next and Rayliant Quantamental go up and down completely randomly.
Pair Corralation between ARK Next and Rayliant Quantamental
Given the investment horizon of 90 days ARK Next Generation is expected to generate 1.66 times more return on investment than Rayliant Quantamental. However, ARK Next is 1.66 times more volatile than Rayliant Quantamental China. It trades about 0.31 of its potential returns per unit of risk. Rayliant Quantamental China is currently generating about 0.05 per unit of risk. If you would invest 10,798 in ARK Next Generation on November 1, 2024 and sell it today you would earn a total of 1,379 from holding ARK Next Generation or generate 12.77% 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. Rayliant Quantamental China
Performance |
| Timeline |
| ARK Next Generation |
| Rayliant Quantamental |
ARK Next and Rayliant Quantamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Next and Rayliant Quantamental
The main advantage of trading using opposite ARK Next and Rayliant Quantamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, Rayliant Quantamental 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 Rayliant Quantamental will offset losses from the drop in Rayliant Quantamental'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 |
| Rayliant Quantamental vs. iShares MSCI China | Rayliant Quantamental vs. Franklin FTSE China | Rayliant Quantamental vs. Simplify Exchange Traded |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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