Correlation Between ARK Next and IShares Thematic
Can any of the company-specific risk be diversified away by investing in both ARK Next and IShares Thematic 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 Thematic 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 Thematic Rotation, you can compare the effects of market volatilities on ARK Next and IShares Thematic 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 Thematic. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and IShares Thematic.
Diversification Opportunities for ARK Next and IShares Thematic
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ARK and IShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and iShares Thematic Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Thematic Rotation 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 Thematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Thematic Rotation has no effect on the direction of ARK Next i.e., ARK Next and IShares Thematic go up and down completely randomly.
Pair Corralation between ARK Next and IShares Thematic
Given the investment horizon of 90 days ARK Next Generation is expected to generate 2.43 times more return on investment than IShares Thematic. However, ARK Next is 2.43 times more volatile than iShares Thematic Rotation. It trades about 0.3 of its potential returns per unit of risk. iShares Thematic Rotation is currently generating about 0.1 per unit of risk. If you would invest 10,541 in ARK Next Generation on September 13, 2024 and sell it today you would earn a total of 1,178 from holding ARK Next Generation or generate 11.18% 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 Thematic Rotation
Performance |
| Timeline |
| ARK Next Generation |
| iShares Thematic Rotation |
ARK Next and IShares Thematic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Next and IShares Thematic
The main advantage of trading using opposite ARK Next and IShares Thematic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, IShares Thematic 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 Thematic will offset losses from the drop in IShares Thematic's long position.| ARK Next vs. Invesco DWA Utilities | ARK Next vs. Invesco Dynamic Large | ARK Next vs. SCOR PK | ARK Next vs. Morningstar Unconstrained Allocation |
| IShares Thematic vs. Vanguard SP 500 | IShares Thematic vs. Vanguard Real Estate | IShares Thematic vs. Vanguard Total Bond | IShares Thematic vs. Vanguard High Dividend |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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