Correlation Between ARK Space and IShares Russell

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

By analyzing existing cross correlation between ARK Space Exploration and iShares Russell Mid Cap, you can compare the effects of market volatilities on ARK Space and IShares Russell 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 Space with a short position of IShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Space and IShares Russell.

Diversification Opportunities for ARK Space and IShares Russell

0.94

Correlation Coefficient

ARK Space  IShares Russell

Almost no diversification

The 3 months correlation between ARK and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ARK Space Exploration and iShares Russell Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell Mid and ARK Space 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 Space Exploration are associated (or correlated) with IShares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell Mid has no effect on the direction of ARK Space i.e., ARK Space and IShares Russell go up and down completely randomly.

Pair Corralation between ARK Space and IShares Russell

Given the investment horizon of 90 days ARK Space Exploration is expected to under-perform the IShares Russell. In addition to that, ARK Space is 1.35 times more volatile than iShares Russell Mid Cap. It trades about -0.04 of its total potential returns per unit of risk. iShares Russell Mid Cap is currently generating about -0.05 per unit of volatility. If you would invest  12,879  in iShares Russell Mid Cap on December 27, 2024 and sell it today you would lose (676.00) from holding iShares Russell Mid Cap or give up 5.25% of portfolio value over 90 days.

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

ARK Space Exploration  vs.  iShares Russell Mid Cap

ARK Space Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days ARK Space Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, ARK Space is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

iShares Russell Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Russell Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IShares Russell is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ARK Space and IShares Russell

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

The idea behind ARK Space Exploration and iShares Russell Mid Cap 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.