Correlation Between WisdomTree International and ARK Autonomous

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

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

Diversification Opportunities for WisdomTree International and ARK Autonomous

-0.74

Correlation Coefficient

WisdomTree International  ARK Autonomous

Pay attention - limited upside

The 3 months correlation between WisdomTree and ARK is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International Al 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 WisdomTree International 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 WisdomTree International Al 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 WisdomTree International i.e., WisdomTree International and ARK Autonomous go up and down completely randomly.

Pair Corralation between WisdomTree International and ARK Autonomous

Given the investment horizon of 90 days WisdomTree International is expected to generate 3.34 times less return on investment than ARK Autonomous. But when comparing it to its historical volatility, WisdomTree International Al is 2.06 times less risky than ARK Autonomous. It trades about 0.05 of its potential returns per unit of risk. ARK Autonomous Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,464  in ARK Autonomous Technology on September 3, 2024 and sell it today you would earn a total of  3,091  from holding ARK Autonomous Technology or generate 69.24% return on investment over 90 days.

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

WisdomTree International Al  vs.  ARK Autonomous Technology

WisdomTree International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree International Al has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, WisdomTree International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

ARK Autonomous Technology

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Autonomous Technology are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, ARK Autonomous reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WisdomTree International and ARK Autonomous

The main advantage of trading using opposite WisdomTree International and ARK Autonomous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree International 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 WisdomTree International Al 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.