Correlation Between ARK Next and Schwab International
Can any of the company-specific risk be diversified away by investing in both ARK Next and Schwab International 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 Schwab International 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 Schwab International Equity, you can compare the effects of market volatilities on ARK Next and Schwab International 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 Schwab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Next and Schwab International.
Diversification Opportunities for ARK Next and Schwab International
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ARK and Schwab is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and Schwab International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab 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 Schwab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab International has no effect on the direction of ARK Next i.e., ARK Next and Schwab International go up and down completely randomly.
Pair Corralation between ARK Next and Schwab International
Given the investment horizon of 90 days ARK Next Generation is expected to generate 2.54 times more return on investment than Schwab International. However, ARK Next is 2.54 times more volatile than Schwab International Equity. It trades about 0.09 of its potential returns per unit of risk. Schwab International Equity is currently generating about 0.07 per unit of risk. If you would invest 4,778 in ARK Next Generation on December 2, 2024 and sell it today you would earn a total of 5,928 from holding ARK Next Generation or generate 124.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ARK Next Generation vs. Schwab International Equity
Performance |
Timeline |
ARK Next Generation |
Schwab International |
ARK Next and Schwab International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ARK Next and Schwab International
The main advantage of trading using opposite ARK Next and Schwab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Next position performs unexpectedly, Schwab International 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 Schwab International will offset losses from the drop in Schwab International'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 |
Schwab International vs. Schwab Emerging Markets | Schwab International vs. Schwab Small Cap ETF | Schwab International vs. Schwab Large Cap ETF | Schwab International vs. Schwab Broad Market |
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.
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