Correlation Between Global X and ARK Innovation
Can any of the company-specific risk be diversified away by investing in both Global X and ARK Innovation 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 Global X and ARK Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Cybersecurity and ARK Innovation ETF, you can compare the effects of market volatilities on Global X and ARK Innovation 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 Global X with a short position of ARK Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and ARK Innovation.
Diversification Opportunities for Global X and ARK Innovation
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and ARK is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Global X Cybersecurity and ARK Innovation ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Innovation ETF and Global X 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 Global X Cybersecurity are associated (or correlated) with ARK Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Innovation ETF has no effect on the direction of Global X i.e., Global X and ARK Innovation go up and down completely randomly.
Pair Corralation between Global X and ARK Innovation
Considering the 90-day investment horizon Global X is expected to generate 2.33 times less return on investment than ARK Innovation. But when comparing it to its historical volatility, Global X Cybersecurity is 2.34 times less risky than ARK Innovation. It trades about 0.26 of its potential returns per unit of risk. ARK Innovation ETF is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,841 in ARK Innovation ETF on August 30, 2024 and sell it today you would earn a total of 874.00 from holding ARK Innovation ETF or generate 18.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Cybersecurity vs. ARK Innovation ETF
Performance |
| Timeline |
| Global X Cybersecurity |
| ARK Innovation ETF |
Global X and ARK Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and ARK Innovation
The main advantage of trading using opposite Global X and ARK Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, ARK Innovation 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 Innovation will offset losses from the drop in ARK Innovation's long position.| Global X vs. iShares Cybersecurity and | Global X vs. First Trust NASDAQ | Global X vs. Global X Cloud | Global X vs. Amplify ETF Trust |
| ARK Innovation vs. Freedom Day Dividend | ARK Innovation vs. Franklin Templeton ETF | ARK Innovation vs. iShares MSCI China | ARK Innovation vs. Tidal Trust II |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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