Correlation Between ARK Space and Vanguard Mid

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

Diversification Opportunities for ARK Space and Vanguard Mid

0.98

Correlation Coefficient

ARK Space  Vanguard Mid

Almost no diversification

The 3 months correlation between ARK and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding ARK Space Exploration and Vanguard Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap 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 Vanguard Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of ARK Space i.e., ARK Space and Vanguard Mid go up and down completely randomly.

Pair Corralation between ARK Space and Vanguard Mid

Given the investment horizon of 90 days ARK Space Exploration is expected to generate 1.4 times more return on investment than Vanguard Mid. However, ARK Space is 1.4 times more volatile than Vanguard Mid Cap Growth. It trades about 0.06 of its potential returns per unit of risk. Vanguard Mid Cap Growth is currently generating about 0.08 per unit of risk. If you would invest  1,531  in ARK Space Exploration on September 12, 2024 and sell it today you would earn a total of  416.00  from holding ARK Space Exploration or generate 27.17% return on investment over 90 days.

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

ARK Space Exploration  vs.  Vanguard Mid Cap Growth

ARK Space Exploration

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Space Exploration are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward-looking signals, ARK Space showed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Mid Cap

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mid Cap Growth are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Vanguard Mid unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ARK Space and Vanguard Mid

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

The idea behind ARK Space Exploration and Vanguard Mid Cap Growth 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.