Correlation Between Barclays ETN and ARK Next
Can any of the company-specific risk be diversified away by investing in both Barclays ETN and ARK Next 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 Barclays ETN and ARK Next into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays ETN Select and ARK Next Generation, you can compare the effects of market volatilities on Barclays ETN and ARK Next 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 Barclays ETN with a short position of ARK Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays ETN and ARK Next.
Diversification Opportunities for Barclays ETN and ARK Next
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Barclays and ARK is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Select and ARK Next Generation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Next Generation and Barclays ETN 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 Barclays ETN Select are associated (or correlated) with ARK Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Next Generation has no effect on the direction of Barclays ETN i.e., Barclays ETN and ARK Next go up and down completely randomly.
Pair Corralation between Barclays ETN and ARK Next
Given the investment horizon of 90 days Barclays ETN is expected to generate 1.7 times less return on investment than ARK Next. But when comparing it to its historical volatility, Barclays ETN Select is 2.45 times less risky than ARK Next. It trades about 0.14 of its potential returns per unit of risk. ARK Next Generation is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,245 in ARK Next Generation on August 30, 2024 and sell it today you would earn a total of 6,506 from holding ARK Next Generation or generate 153.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Barclays ETN Select vs. ARK Next Generation
Performance |
| Timeline |
| Barclays ETN Select |
| ARK Next Generation |
Barclays ETN and ARK Next Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays ETN and ARK Next
The main advantage of trading using opposite Barclays ETN and ARK Next positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays ETN position performs unexpectedly, ARK Next 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 ARK Next will offset losses from the drop in ARK Next's long position.| Barclays ETN vs. Alerian Energy Infrastructure | Barclays ETN vs. UBS AG London | Barclays ETN vs. First Trust North | Barclays ETN vs. Tortoise North American |
| ARK Next vs. ARK Autonomous Technology | ARK Next vs. ARK Genomic Revolution | ARK Next vs. ARK Fintech Innovation | ARK Next vs. ARK Innovation ETF |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |