Correlation Between ARK Innovation and Global X

Can any of the company-specific risk be diversified away by investing in both ARK Innovation and Global X 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 ARK Innovation and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARK Innovation ETF and Global X, you can compare the effects of market volatilities on ARK Innovation and Global X 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 ARK Innovation with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Innovation and Global X.

Diversification Opportunities for ARK Innovation and Global X

0.0

Correlation Coefficient

ARK Innovation  Global X

Pay attention - limited upside

The 3 months correlation between ARK and Global is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ARK Innovation ETF and Global X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X and ARK Innovation 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 ARK Innovation ETF are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X has no effect on the direction of ARK Innovation i.e., ARK Innovation and Global X go up and down completely randomly.

Pair Corralation between ARK Innovation and Global X

If you would invest  2,813  in Global X on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Global X or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

ARK Innovation ETF  vs.  Global X

ARK Innovation ETF

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Innovation ETF are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, ARK Innovation disclosed solid returns over the last few months and may actually be approaching a breakup point.

Global X

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Global X is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ARK Innovation and Global X

The main advantage of trading using opposite ARK Innovation and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Innovation position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.

The idea behind ARK Innovation ETF and Global X pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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.