Correlation Between ARK Autonomous and VanEck Rare

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

Diversification Opportunities for ARK Autonomous and VanEck Rare

-0.82

Correlation Coefficient

ARK Autonomous  VanEck Rare

Pay attention - limited upside

The 3 months correlation between ARK and VanEck is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding ARK Autonomous Technology and VanEck Rare EarthStrategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Rare EarthStr 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 VanEck Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Rare EarthStr has no effect on the direction of ARK Autonomous i.e., ARK Autonomous and VanEck Rare go up and down completely randomly.

Pair Corralation between ARK Autonomous and VanEck Rare

Given the investment horizon of 90 days ARK Autonomous Technology is expected to generate 1.76 times more return on investment than VanEck Rare. However, ARK Autonomous is 1.76 times more volatile than VanEck Rare EarthStrategic. It trades about 0.07 of its potential returns per unit of risk. VanEck Rare EarthStrategic is currently generating about -0.16 per unit of risk. If you would invest  7,781  in ARK Autonomous Technology on October 12, 2024 and sell it today you would earn a total of  214.00  from holding ARK Autonomous Technology or generate 2.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ARK Autonomous Technology  vs.  VanEck Rare EarthStrategic

ARK Autonomous Technology

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Autonomous Technology are ranked lower than 17 (%) 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.

VanEck Rare EarthStr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Rare EarthStrategic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with ARK Autonomous and VanEck Rare

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

The idea behind ARK Autonomous Technology and VanEck Rare EarthStrategic 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.