Correlation Between ARK Next and ProShares Ultra

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

Diversification Opportunities for ARK Next and ProShares Ultra

0.71

Correlation Coefficient

ARK Next  ProShares Ultra

Poor diversification

The 3 months correlation between ARK and ProShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ARK Next Generation and ProShares Ultra Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Semi 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 Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Semi has no effect on the direction of ARK Next i.e., ARK Next and ProShares Ultra go up and down completely randomly.

Pair Corralation between ARK Next and ProShares Ultra

Given the investment horizon of 90 days ARK Next Generation is expected to generate 0.42 times more return on investment than ProShares Ultra. However, ARK Next Generation is 2.39 times less risky than ProShares Ultra. It trades about -0.07 of its potential returns per unit of risk. ProShares Ultra Semiconductors is currently generating about -0.09 per unit of risk. If you would invest  10,971  in ARK Next Generation on December 28, 2024 and sell it today you would lose (1,335) from holding ARK Next Generation or give up 12.17% of portfolio value over 90 days.

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

ARK Next Generation  vs.  ProShares Ultra Semiconductors

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.

ProShares Ultra Semi

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Ultra Semiconductors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with ARK Next and ProShares Ultra

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

The idea behind ARK Next Generation and ProShares Ultra Semiconductors 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.