Correlation Between First Trust and ARK 21Shares
Can any of the company-specific risk be diversified away by investing in both First Trust and ARK 21Shares 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 21Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust SkyBridge and ARK 21Shares Active, you can compare the effects of market volatilities on First Trust and ARK 21Shares 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 21Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and ARK 21Shares.
Diversification Opportunities for First Trust and ARK 21Shares
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and ARK is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and ARK 21Shares Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK 21Shares Active 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 SkyBridge are associated (or correlated) with ARK 21Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK 21Shares Active has no effect on the direction of First Trust i.e., First Trust and ARK 21Shares go up and down completely randomly.
Pair Corralation between First Trust and ARK 21Shares
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 1.93 times more return on investment than ARK 21Shares. However, First Trust is 1.93 times more volatile than ARK 21Shares Active. It trades about 0.23 of its potential returns per unit of risk. ARK 21Shares Active is currently generating about 0.32 per unit of risk. If you would invest 1,212 in First Trust SkyBridge on August 26, 2024 and sell it today you would earn a total of 778.00 from holding First Trust SkyBridge or generate 64.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust SkyBridge vs. ARK 21Shares Active
Performance |
| Timeline |
| First Trust SkyBridge |
| ARK 21Shares Active |
First Trust and ARK 21Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and ARK 21Shares
The main advantage of trading using opposite First Trust and ARK 21Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, ARK 21Shares 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 21Shares will offset losses from the drop in ARK 21Shares' long position.| First Trust vs. VanEck Digital Transformation | First Trust vs. Bitwise Crypto Industry | First Trust vs. Global X Blockchain | First Trust vs. First Trust Indxx |
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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.
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