Correlation Between ARK Innovation and Pinnacle Focused

Can any of the company-specific risk be diversified away by investing in both ARK Innovation and Pinnacle Focused 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 Pinnacle Focused 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 Pinnacle Focused Opportunities, you can compare the effects of market volatilities on ARK Innovation and Pinnacle Focused 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 Pinnacle Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Innovation and Pinnacle Focused.

Diversification Opportunities for ARK Innovation and Pinnacle Focused

0.99

Correlation Coefficient

ARK Innovation  Pinnacle Focused

No risk reduction

The 3 months correlation between ARK and Pinnacle is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding ARK Innovation ETF and Pinnacle Focused Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Focused Opp 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 Pinnacle Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Focused Opp has no effect on the direction of ARK Innovation i.e., ARK Innovation and Pinnacle Focused go up and down completely randomly.

Pair Corralation between ARK Innovation and Pinnacle Focused

Given the investment horizon of 90 days ARK Innovation ETF is expected to generate 0.93 times more return on investment than Pinnacle Focused. However, ARK Innovation ETF is 1.07 times less risky than Pinnacle Focused. It trades about -0.08 of its potential returns per unit of risk. Pinnacle Focused Opportunities is currently generating about -0.1 per unit of risk. If you would invest  5,761  in ARK Innovation ETF on December 28, 2024 and sell it today you would lose (891.00) from holding ARK Innovation ETF or give up 15.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

ARK Innovation ETF  vs.  Pinnacle Focused Opportunities

ARK Innovation ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days ARK Innovation ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Pinnacle Focused Opp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pinnacle Focused Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with ARK Innovation and Pinnacle Focused

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

The idea behind ARK Innovation ETF and Pinnacle Focused Opportunities 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.