Correlation Between ARK Venture and Pekin Life

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

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

Diversification Opportunities for ARK Venture and Pekin Life

0.77

Correlation Coefficient

ARK Venture  Pekin Life

Poor diversification

The 3 months correlation between ARK and Pekin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ARK Venture Fund and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance and ARK Venture 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 Venture Fund are associated (or correlated) with Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of ARK Venture i.e., ARK Venture and Pekin Life go up and down completely randomly.

Pair Corralation between ARK Venture and Pekin Life

Assuming the 90 days horizon ARK Venture Fund is expected to generate 3.33 times more return on investment than Pekin Life. However, ARK Venture is 3.33 times more volatile than Pekin Life Insurance. It trades about 0.27 of its potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.13 per unit of risk. If you would invest  2,590  in ARK Venture Fund on September 15, 2024 and sell it today you would earn a total of  395.00  from holding ARK Venture Fund or generate 15.25% return on investment over 90 days.

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

ARK Venture Fund  vs.  Pekin Life Insurance

ARK Venture Fund

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Venture Fund are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ARK Venture showed solid returns over the last few months and may actually be approaching a breakup point.

Pekin Life Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pekin Life Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ARK Venture and Pekin Life

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

The idea behind ARK Venture Fund and Pekin Life Insurance 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.