Correlation Between ARK Genomic and ARK Autonomous

Can any of the company-specific risk be diversified away by investing in both ARK Genomic 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 Genomic 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 Genomic Revolution and ARK Autonomous Technology, you can compare the effects of market volatilities on ARK Genomic 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 Genomic with a short position of ARK Autonomous. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK Genomic and ARK Autonomous.

Diversification Opportunities for ARK Genomic and ARK Autonomous

-0.31

Correlation Coefficient

ARK Genomic  ARK Autonomous

Very good diversification

The 3 months correlation between ARK and ARK is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ARK Genomic Revolution 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 Genomic 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 Genomic Revolution 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 Genomic i.e., ARK Genomic and ARK Autonomous go up and down completely randomly.

Pair Corralation between ARK Genomic and ARK Autonomous

Given the investment horizon of 90 days ARK Genomic is expected to generate 6.44 times less return on investment than ARK Autonomous. In addition to that, ARK Genomic is 1.49 times more volatile than ARK Autonomous Technology. It trades about 0.03 of its total potential returns per unit of risk. ARK Autonomous Technology is currently generating about 0.33 per unit of volatility. If you would invest  5,409  in ARK Autonomous Technology on September 1, 2024 and sell it today you would earn a total of  2,038  from holding ARK Autonomous Technology or generate 37.68% return on investment over 90 days.

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

ARK Genomic Revolution  vs.  ARK Autonomous Technology

ARK Genomic Revolution

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Genomic Revolution are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, ARK Genomic is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ARK Autonomous Technology

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Autonomous Technology are ranked lower than 25 (%) 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 ARK Genomic and ARK Autonomous

The main advantage of trading using opposite ARK Genomic and ARK Autonomous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK Genomic 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 Genomic Revolution 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.