Correlation Between ARK Next and KraneShares Global
Can any of the company-specific risk be diversified away by investing in both ARK Next and KraneShares Global 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 KraneShares Global 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 KraneShares Global Carbon, you can compare the effects of market volatilities on ARK Next and KraneShares Global 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 KraneShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and KraneShares Global.
Diversification Opportunities for ARK Next and KraneShares Global
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARK and KraneShares is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and KraneShares Global Carbon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Global Carbon 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 KraneShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Global Carbon has no effect on the direction of ARK Next i.e., ARK Next and KraneShares Global go up and down completely randomly.
Pair Corralation between ARK Next and KraneShares Global
Given the investment horizon of 90 days ARK Next is expected to generate 6.55 times less return on investment than KraneShares Global. In addition to that, ARK Next is 1.66 times more volatile than KraneShares Global Carbon. It trades about 0.02 of its total potential returns per unit of risk. KraneShares Global Carbon is currently generating about 0.19 per unit of volatility. If you would invest 2,817 in KraneShares Global Carbon on October 9, 2024 and sell it today you would earn a total of 143.00 from holding KraneShares Global Carbon or generate 5.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ARK Next Generation vs. KraneShares Global Carbon
Performance |
Timeline |
ARK Next Generation |
KraneShares Global Carbon |
ARK Next and KraneShares Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ARK Next and KraneShares Global
The main advantage of trading using opposite ARK Next and KraneShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, KraneShares Global 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 KraneShares Global will offset losses from the drop in KraneShares Global's long position.ARK Next vs. ARK Autonomous Technology | ARK Next vs. ARK Genomic Revolution | ARK Next vs. ARK Fintech Innovation | ARK Next vs. ARK Innovation ETF |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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