Correlation Between ARK Next and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both ARK Next and Direxion Shares 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 Direxion Shares 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 Direxion Shares ETF, you can compare the effects of market volatilities on ARK Next and Direxion Shares 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 Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and Direxion Shares.
Diversification Opportunities for ARK Next and Direxion Shares
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ARK and Direxion is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares ETF 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 Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of ARK Next i.e., ARK Next and Direxion Shares go up and down completely randomly.
Pair Corralation between ARK Next and Direxion Shares
Given the investment horizon of 90 days ARK Next Generation is expected to generate 1.01 times more return on investment than Direxion Shares. However, ARK Next is 1.01 times more volatile than Direxion Shares ETF. It trades about 0.15 of its potential returns per unit of risk. Direxion Shares ETF is currently generating about 0.0 per unit of risk. If you would invest 7,540 in ARK Next Generation on September 1, 2024 and sell it today you would earn a total of 3,287 from holding ARK Next Generation or generate 43.59% 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. Direxion Shares ETF
Performance |
| Timeline |
| ARK Next Generation |
| Direxion Shares ETF |
ARK Next and Direxion Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARK Next and Direxion Shares
The main advantage of trading using opposite ARK Next and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, Direxion Shares 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 Direxion Shares will offset losses from the drop in Direxion Shares' 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 |
| Direxion Shares vs. Direxion Daily MSCI | Direxion Shares vs. Innovator MSCI Emerging | Direxion Shares vs. Innovator ETFs Trust | Direxion Shares vs. Innovator MSCI Emerging |
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.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |