Correlation Between ARK Venture and Transurban

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

Diversification Opportunities for ARK Venture and Transurban

-0.72

Correlation Coefficient

ARK Venture  Transurban

Pay attention - limited upside

The 3 months correlation between ARK and Transurban is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ARK Venture Fund and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group 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 Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of ARK Venture i.e., ARK Venture and Transurban go up and down completely randomly.

Pair Corralation between ARK Venture and Transurban

Assuming the 90 days horizon ARK Venture Fund is expected to generate 0.35 times more return on investment than Transurban. However, ARK Venture Fund is 2.87 times less risky than Transurban. It trades about 0.28 of its potential returns per unit of risk. Transurban Group is currently generating about -0.08 per unit of risk. If you would invest  2,591  in ARK Venture Fund on September 13, 2024 and sell it today you would earn a total of  408.00  from holding ARK Venture Fund or generate 15.75% return on investment over 90 days.

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

ARK Venture Fund  vs.  Transurban Group

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.

Transurban Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transurban Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ARK Venture and Transurban

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

The idea behind ARK Venture Fund and Transurban Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.