Correlation Between ARK Israel and ARK Autonomous

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

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

Diversification Opportunities for ARK Israel and ARK Autonomous

0.63

Correlation Coefficient

ARK Israel  ARK Autonomous

Poor diversification

The 3 months correlation between ARK and ARK is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ARK Israel Innovative 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 ARK Israel 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 Israel Innovative 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 ARK Israel i.e., ARK Israel and ARK Autonomous go up and down completely randomly.

Pair Corralation between ARK Israel and ARK Autonomous

Given the investment horizon of 90 days ARK Israel Innovative is expected to generate 0.63 times more return on investment than ARK Autonomous. However, ARK Israel Innovative is 1.59 times less risky than ARK Autonomous. It trades about 0.02 of its potential returns per unit of risk. ARK Autonomous Technology is currently generating about -0.07 per unit of risk. If you would invest  2,235  in ARK Israel Innovative on December 26, 2024 and sell it today you would earn a total of  26.00  from holding ARK Israel Innovative or generate 1.16% return on investment over 90 days.

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

ARK Israel Innovative  vs.  ARK Autonomous Technology

ARK Israel Innovative

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Israel Innovative are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, ARK Israel is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

ARK Autonomous Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days ARK Autonomous Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Etf's forward-looking signals remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with ARK Israel and ARK Autonomous

The main advantage of trading using opposite ARK Israel and ARK Autonomous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Israel 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 ARK Israel Innovative 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.