Correlation Between ARK Next and US Treasury
Can any of the company-specific risk be diversified away by investing in both ARK Next and US Treasury 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 US Treasury 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 US Treasury 7, you can compare the effects of market volatilities on ARK Next and US Treasury 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 US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and US Treasury.
Diversification Opportunities for ARK Next and US Treasury
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ARK and USVN is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and US Treasury 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 7 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 US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 7 has no effect on the direction of ARK Next i.e., ARK Next and US Treasury go up and down completely randomly.
Pair Corralation between ARK Next and US Treasury
Given the investment horizon of 90 days ARK Next Generation is expected to generate 5.29 times more return on investment than US Treasury. However, ARK Next is 5.29 times more volatile than US Treasury 7. It trades about 0.1 of its potential returns per unit of risk. US Treasury 7 is currently generating about 0.04 per unit of risk. If you would invest 6,985 in ARK Next Generation on September 2, 2024 and sell it today you would earn a total of 3,842 from holding ARK Next Generation or generate 55.0% 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. US Treasury 7
Performance |
| Timeline |
| ARK Next Generation |
| US Treasury 7 |
ARK Next and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Next and US Treasury
The main advantage of trading using opposite ARK Next and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, US Treasury 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 US Treasury will offset losses from the drop in US Treasury'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 |
| US Treasury vs. Janus Henderson Short | US Treasury vs. iShares CMBS ETF | US Treasury vs. Janus Detroit Street | US Treasury vs. Alpha Architect Gdsdn |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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