Correlation Between ProShares Trust and ARK Autonomous

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

By analyzing existing cross correlation between ProShares Trust and ARK Autonomous Technology, you can compare the effects of market volatilities on ProShares Trust and ARK Autonomous 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 ProShares Trust with a short position of ARK Autonomous. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and ARK Autonomous.

Diversification Opportunities for ProShares Trust and ARK Autonomous

-0.96

Correlation Coefficient

ProShares Trust  ARK Autonomous

Pay attention - limited upside

The 3 months correlation between ProShares and ARK is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and ARK Autonomous Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Autonomous Technology and ProShares Trust 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 ProShares Trust are associated (or correlated) with ARK Autonomous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Autonomous Technology has no effect on the direction of ProShares Trust i.e., ProShares Trust and ARK Autonomous go up and down completely randomly.

Pair Corralation between ProShares Trust and ARK Autonomous

Given the investment horizon of 90 days ProShares Trust is expected to under-perform the ARK Autonomous. In addition to that, ProShares Trust is 1.88 times more volatile than ARK Autonomous Technology. It trades about -0.19 of its total potential returns per unit of risk. ARK Autonomous Technology is currently generating about 0.3 per unit of volatility. If you would invest  6,926  in ARK Autonomous Technology on September 13, 2024 and sell it today you would earn a total of  776.00  from holding ARK Autonomous Technology or generate 11.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

ProShares Trust   vs.  ARK Autonomous Technology

ProShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

ARK Autonomous Technology

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Autonomous Technology are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, ARK Autonomous reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Trust and ARK Autonomous

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

The idea behind ProShares Trust and ARK Autonomous Technology 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.