Correlation Between ProShares UltraShort and ARK Next
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort 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 ProShares UltraShort and ARK Next into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort 20 and ARK Next Generation, you can compare the effects of market volatilities on ProShares UltraShort 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 ProShares UltraShort with a short position of ARK Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and ARK Next.
Diversification Opportunities for ProShares UltraShort and ARK Next
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and ARK is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 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 ProShares UltraShort 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 ProShares UltraShort 20 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 ProShares UltraShort i.e., ProShares UltraShort and ARK Next go up and down completely randomly.
Pair Corralation between ProShares UltraShort and ARK Next
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to under-perform the ARK Next. But the etf apears to be less risky and, when comparing its historical volatility, ProShares UltraShort 20 is 1.1 times less risky than ARK Next. The etf trades about -0.04 of its potential returns per unit of risk. The ARK Next Generation is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 9,071 in ARK Next Generation on August 30, 2024 and sell it today you would earn a total of 1,680 from holding ARK Next Generation or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. ARK Next Generation
Performance |
| Timeline |
| ProShares UltraShort |
| ARK Next Generation |
ProShares UltraShort and ARK Next Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and ARK Next
The main advantage of trading using opposite ProShares UltraShort and ARK Next positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort 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.| ProShares UltraShort vs. ProShares UltraShort 7 10 | ProShares UltraShort vs. ProShares UltraShort SP500 | ProShares UltraShort vs. iShares 20 Year | ProShares UltraShort vs. Direxion Daily 20 |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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