Correlation Between Martin Currie and ARK Innovation

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

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

Diversification Opportunities for Martin Currie and ARK Innovation

-0.76

Correlation Coefficient

Martin Currie  ARK Innovation

Pay attention - limited upside

The 3 months correlation between Martin and ARK is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Martin Currie Sustainable 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 Martin Currie 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 Martin Currie Sustainable 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 Martin Currie i.e., Martin Currie and ARK Innovation go up and down completely randomly.

Pair Corralation between Martin Currie and ARK Innovation

Given the investment horizon of 90 days Martin Currie Sustainable is expected to under-perform the ARK Innovation. But the etf apears to be less risky and, when comparing its historical volatility, Martin Currie Sustainable is 3.21 times less risky than ARK Innovation. The etf trades about -0.4 of its potential returns per unit of risk. The ARK Innovation ETF is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  6,131  in ARK Innovation ETF on October 8, 2024 and sell it today you would lose (149.00) from holding ARK Innovation ETF or give up 2.43% of portfolio value over 90 days.

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

Martin Currie Sustainable  vs.  ARK Innovation ETF

Martin Currie Sustainable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Martin Currie Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

ARK Innovation ETF

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Innovation ETF are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, ARK Innovation disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Martin Currie and ARK Innovation

The main advantage of trading using opposite Martin Currie and ARK Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Currie 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 Martin Currie Sustainable 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.