Correlation Between First Trust and ARK Autonomous
Can any of the company-specific risk be diversified away by investing in both First Trust and ARK Autonomous 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 First Trust and ARK Autonomous into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust S Network and ARK Autonomous Technology, you can compare the effects of market volatilities on First Trust and ARK Autonomous 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 First Trust with a short position of ARK Autonomous. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and ARK Autonomous.
Diversification Opportunities for First Trust and ARK Autonomous
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and ARK is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding First Trust S Network and ARK Autonomous Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Autonomous Technology and First Trust 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 First Trust S Network are associated (or correlated) with ARK Autonomous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Autonomous Technology has no effect on the direction of First Trust i.e., First Trust and ARK Autonomous go up and down completely randomly.
Pair Corralation between First Trust and ARK Autonomous
Given the investment horizon of 90 days First Trust is expected to generate 3.33 times less return on investment than ARK Autonomous. But when comparing it to its historical volatility, First Trust S Network is 1.25 times less risky than ARK Autonomous. It trades about 0.01 of its potential returns per unit of risk. ARK Autonomous Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 8,102 in ARK Autonomous Technology on November 18, 2024 and sell it today you would earn a total of 84.00 from holding ARK Autonomous Technology or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust S Network vs. ARK Autonomous Technology
Performance |
| Timeline |
| First Trust S |
| ARK Autonomous Technology |
First Trust and ARK Autonomous Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and ARK Autonomous
The main advantage of trading using opposite First Trust and ARK Autonomous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, ARK Autonomous 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 Autonomous will offset losses from the drop in ARK Autonomous' long position.| First Trust vs. KraneShares Electric Vehicles | First Trust vs. First Trust Nasdaq | First Trust vs. VanEck Gaming ETF | First Trust vs. First Trust NASDAQ |
| ARK Autonomous vs. ARK Fintech Innovation | ARK Autonomous vs. ARK Next Generation | ARK Autonomous vs. ARK Genomic Revolution | ARK Autonomous 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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