Correlation Between ARK Next and ProShares Short
Can any of the company-specific risk be diversified away by investing in both ARK Next and ProShares Short 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 ProShares Short 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 ProShares Short MidCap400, you can compare the effects of market volatilities on ARK Next and ProShares Short 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 ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and ProShares Short.
Diversification Opportunities for ARK Next and ProShares Short
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARK and ProShares is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and ProShares Short MidCap400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short MidCap400 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 ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short MidCap400 has no effect on the direction of ARK Next i.e., ARK Next and ProShares Short go up and down completely randomly.
Pair Corralation between ARK Next and ProShares Short
Given the investment horizon of 90 days ARK Next Generation is expected to generate 2.04 times more return on investment than ProShares Short. However, ARK Next is 2.04 times more volatile than ProShares Short MidCap400. It trades about 0.08 of its potential returns per unit of risk. ProShares Short MidCap400 is currently generating about -0.02 per unit of risk. If you would invest 5,576 in ARK Next Generation on October 24, 2024 and sell it today you would earn a total of 6,235 from holding ARK Next Generation or generate 111.82% 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. ProShares Short MidCap400
Performance |
Timeline |
ARK Next Generation |
ProShares Short MidCap400 |
ARK Next and ProShares Short Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ARK Next and ProShares Short
The main advantage of trading using opposite ARK Next and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short'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 |
ProShares Short vs. ProShares Short SmallCap600 | ProShares Short vs. ProShares UltraShort MidCap400 | ProShares Short vs. ProShares UltraShort SmallCap600 | ProShares Short vs. ProShares Short MSCI |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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