Correlation Between Global X and ARK Autonomous

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

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

Diversification Opportunities for Global X and ARK Autonomous

0.35

Correlation Coefficient

Global X  ARK Autonomous

Weak diversification

The 3 months correlation between Global and ARK is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Global X Lithium 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 Global X 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 Global X Lithium 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 Global X i.e., Global X and ARK Autonomous go up and down completely randomly.

Pair Corralation between Global X and ARK Autonomous

Considering the 90-day investment horizon Global X Lithium is expected to generate 0.55 times more return on investment than ARK Autonomous. However, Global X Lithium is 1.82 times less risky than ARK Autonomous. It trades about -0.04 of its potential returns per unit of risk. ARK Autonomous Technology is currently generating about -0.08 per unit of risk. If you would invest  4,184  in Global X Lithium on December 27, 2024 and sell it today you would lose (153.00) from holding Global X Lithium or give up 3.66% of portfolio value over 90 days.

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

Global X Lithium  vs.  ARK Autonomous Technology

Global X Lithium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Global X is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private 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 Global X and ARK Autonomous

The main advantage of trading using opposite Global X and ARK Autonomous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Lithium 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.