Correlation Between IShares Healthcare and ARK Genomic
Can any of the company-specific risk be diversified away by investing in both IShares Healthcare and ARK Genomic 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 IShares Healthcare and ARK Genomic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Healthcare ETF and ARK Genomic Revolution, you can compare the effects of market volatilities on IShares Healthcare and ARK Genomic 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 IShares Healthcare with a short position of ARK Genomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Healthcare and ARK Genomic.
Diversification Opportunities for IShares Healthcare and ARK Genomic
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and ARK is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares Healthcare ETF and ARK Genomic Revolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Genomic Revolution and IShares Healthcare 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 iShares Healthcare ETF are associated (or correlated) with ARK Genomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Genomic Revolution has no effect on the direction of IShares Healthcare i.e., IShares Healthcare and ARK Genomic go up and down completely randomly.
Pair Corralation between IShares Healthcare and ARK Genomic
Considering the 90-day investment horizon iShares Healthcare ETF is expected to under-perform the ARK Genomic. But the etf apears to be less risky and, when comparing its historical volatility, iShares Healthcare ETF is 3.5 times less risky than ARK Genomic. The etf trades about -0.19 of its potential returns per unit of risk. The ARK Genomic Revolution is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,406 in ARK Genomic Revolution on August 27, 2024 and sell it today you would lose (23.00) from holding ARK Genomic Revolution or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Healthcare ETF vs. ARK Genomic Revolution
Performance |
| Timeline |
| iShares Healthcare ETF |
| ARK Genomic Revolution |
IShares Healthcare and ARK Genomic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Healthcare and ARK Genomic
The main advantage of trading using opposite IShares Healthcare and ARK Genomic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Healthcare position performs unexpectedly, ARK Genomic 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 Genomic will offset losses from the drop in ARK Genomic's long position.| IShares Healthcare vs. Global X Clean | IShares Healthcare vs. Global X Renewable | IShares Healthcare vs. Global X Thematic | IShares Healthcare vs. Global X AgTech |
| ARK Genomic vs. Global X Clean | ARK Genomic vs. Global X Renewable | ARK Genomic vs. Global X Thematic | ARK Genomic vs. Global X AgTech |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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