Correlation Between VanEck Digital and ARK 21Shares

Can any of the company-specific risk be diversified away by investing in both VanEck Digital and ARK 21Shares 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 VanEck Digital and ARK 21Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VanEck Digital Transformation and ARK 21Shares Active, you can compare the effects of market volatilities on VanEck Digital and ARK 21Shares 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 VanEck Digital with a short position of ARK 21Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Digital and ARK 21Shares.

Diversification Opportunities for VanEck Digital and ARK 21Shares

0.92

Correlation Coefficient

VanEck Digital  ARK 21Shares

Almost no diversification

The 3 months correlation between VanEck and ARK is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Digital Transformation and ARK 21Shares Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK 21Shares Active and VanEck Digital 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 VanEck Digital Transformation are associated (or correlated) with ARK 21Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK 21Shares Active has no effect on the direction of VanEck Digital i.e., VanEck Digital and ARK 21Shares go up and down completely randomly.

Pair Corralation between VanEck Digital and ARK 21Shares

Given the investment horizon of 90 days VanEck Digital is expected to generate 2.13 times less return on investment than ARK 21Shares. In addition to that, VanEck Digital is 1.47 times more volatile than ARK 21Shares Active. It trades about 0.06 of its total potential returns per unit of risk. ARK 21Shares Active is currently generating about 0.17 per unit of volatility. If you would invest  3,105  in ARK 21Shares Active on October 8, 2024 and sell it today you would earn a total of  803.00  from holding ARK 21Shares Active or generate 25.86% return on investment over 90 days.

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

VanEck Digital Transformation  vs.  ARK 21Shares Active

VanEck Digital Trans

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Digital Transformation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VanEck Digital reported solid returns over the last few months and may actually be approaching a breakup point.

ARK 21Shares Active

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ARK 21Shares Active are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward-looking signals, ARK 21Shares showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck Digital and ARK 21Shares

The main advantage of trading using opposite VanEck Digital and ARK 21Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Digital position performs unexpectedly, ARK 21Shares 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 21Shares will offset losses from the drop in ARK 21Shares' long position.

The idea behind VanEck Digital Transformation and ARK 21Shares Active 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 CEOs Directory module to screen CEOs from public companies around the world.