Correlation Between ARK Next and ProShares UltraPro
Can any of the company-specific risk be diversified away by investing in both ARK Next and ProShares UltraPro 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 ProShares UltraPro 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 ProShares UltraPro SP500, you can compare the effects of market volatilities on ARK Next and ProShares UltraPro 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 ProShares UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and ProShares UltraPro.
Diversification Opportunities for ARK Next and ProShares UltraPro
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ARK and ProShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and ProShares UltraPro SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro SP500 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 ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro SP500 has no effect on the direction of ARK Next i.e., ARK Next and ProShares UltraPro go up and down completely randomly.
Pair Corralation between ARK Next and ProShares UltraPro
Given the investment horizon of 90 days ARK Next is expected to generate 1.19 times less return on investment than ProShares UltraPro. But when comparing it to its historical volatility, ARK Next Generation is 1.11 times less risky than ProShares UltraPro. It trades about 0.1 of its potential returns per unit of risk. ProShares UltraPro SP500 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,192 in ProShares UltraPro SP500 on August 27, 2024 and sell it today you would earn a total of 5,202 from holding ProShares UltraPro SP500 or generate 124.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARK Next Generation vs. ProShares UltraPro SP500
Performance |
| Timeline |
| ARK Next Generation |
| ProShares UltraPro SP500 |
ARK Next and ProShares UltraPro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Next and ProShares UltraPro
The main advantage of trading using opposite ARK Next and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, ProShares UltraPro 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 ProShares UltraPro will offset losses from the drop in ProShares UltraPro's long position.| ARK Next vs. Invesco DWA Utilities | ARK Next vs. Invesco Dynamic Large | ARK Next vs. Invesco Dynamic Large | ARK Next vs. HUMANA INC |
| ProShares UltraPro vs. ProShares UltraPro Dow30 | ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. ProShares UltraPro QQQ | ProShares UltraPro vs. Direxion Daily Small |
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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