Correlation Between ARK Autonomous and IndexIQ

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

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

Diversification Opportunities for ARK Autonomous and IndexIQ

0.43

Correlation Coefficient

ARK Autonomous  IndexIQ

Very weak diversification

The 3 months correlation between ARK and IndexIQ is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ARK Autonomous Technology and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and ARK Autonomous 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 Autonomous Technology are associated (or correlated) with IndexIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ has no effect on the direction of ARK Autonomous i.e., ARK Autonomous and IndexIQ go up and down completely randomly.

Pair Corralation between ARK Autonomous and IndexIQ

If you would invest  8,135  in ARK Autonomous Technology on October 25, 2024 and sell it today you would earn a total of  290.00  from holding ARK Autonomous Technology or generate 3.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	5.56%
Values	Daily Returns

ARK Autonomous Technology  vs.  IndexIQ

ARK Autonomous Technology

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Autonomous Technology are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, ARK Autonomous reported solid returns over the last few months and may actually be approaching a breakup point.

IndexIQ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IndexIQ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with ARK Autonomous and IndexIQ

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

The idea behind ARK Autonomous Technology and IndexIQ 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.