Correlation Between Intel and ARK Innovation

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

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

Diversification Opportunities for Intel and ARK Innovation

-0.18

Correlation Coefficient

Intel  ARK Innovation

Good diversification

The 3 months correlation between Intel and ARK is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Intel and ARK Innovation ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Innovation ETF and Intel 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 Intel are associated (or correlated) with ARK Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Innovation ETF has no effect on the direction of Intel i.e., Intel and ARK Innovation go up and down completely randomly.

Pair Corralation between Intel and ARK Innovation

Given the investment horizon of 90 days Intel is expected to generate 1.47 times more return on investment than ARK Innovation. However, Intel is 1.47 times more volatile than ARK Innovation ETF. It trades about 0.08 of its potential returns per unit of risk. ARK Innovation ETF is currently generating about -0.06 per unit of risk. If you would invest  2,030  in Intel on December 27, 2024 and sell it today you would earn a total of  332.00  from holding Intel or generate 16.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Intel  vs.  ARK Innovation ETF

Intel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

ARK Innovation ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days ARK Innovation ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Intel and ARK Innovation

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

The idea behind Intel and ARK Innovation ETF 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.