Correlation Between ARK Next and BNY Mellon

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

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

Diversification Opportunities for ARK Next and BNY Mellon

-0.33

Correlation Coefficient

ARK Next  BNY Mellon

Very good diversification

The 3 months correlation between ARK and BNY is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and BNY Mellon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon International and ARK Next 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 Next Generation are associated (or correlated) with BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon International has no effect on the direction of ARK Next i.e., ARK Next and BNY Mellon go up and down completely randomly.

Pair Corralation between ARK Next and BNY Mellon

Given the investment horizon of 90 days ARK Next Generation is expected to under-perform the BNY Mellon. In addition to that, ARK Next is 3.09 times more volatile than BNY Mellon International. It trades about -0.06 of its total potential returns per unit of risk. BNY Mellon International is currently generating about 0.18 per unit of volatility. If you would invest  7,237  in BNY Mellon International on December 23, 2024 and sell it today you would earn a total of  669.00  from holding BNY Mellon International or generate 9.24% return on investment over 90 days.

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

ARK Next Generation  vs.  BNY Mellon International

ARK Next Generation

Risk-Adjusted Performance

Very Weak

Over the last 90 days ARK Next Generation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's forward-looking signals remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

BNY Mellon International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward indicators, BNY Mellon may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ARK Next and BNY Mellon

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

The idea behind ARK Next Generation and BNY Mellon International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.