Correlation Between Global X and ARK Fintech
Can any of the company-specific risk be diversified away by investing in both Global X and ARK Fintech 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 Fintech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Cloud and ARK Fintech Innovation, you can compare the effects of market volatilities on Global X and ARK Fintech 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 Fintech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and ARK Fintech.
Diversification Opportunities for Global X and ARK Fintech
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and ARK is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Global X Cloud and ARK Fintech Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Fintech Innovation 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 Cloud are associated (or correlated) with ARK Fintech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Fintech Innovation has no effect on the direction of Global X i.e., Global X and ARK Fintech go up and down completely randomly.
Pair Corralation between Global X and ARK Fintech
Given the investment horizon of 90 days Global X is expected to generate 2.37 times less return on investment than ARK Fintech. But when comparing it to its historical volatility, Global X Cloud is 1.43 times less risky than ARK Fintech. It trades about 0.06 of its potential returns per unit of risk. ARK Fintech Innovation is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,417 in ARK Fintech Innovation on September 23, 2024 and sell it today you would earn a total of 2,436 from holding ARK Fintech Innovation or generate 171.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Global X Cloud vs. ARK Fintech Innovation
Performance |
Timeline |
Global X Cloud |
ARK Fintech Innovation |
Global X and ARK Fintech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global X and ARK Fintech
The main advantage of trading using opposite Global X and ARK Fintech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, ARK Fintech 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 Fintech will offset losses from the drop in ARK Fintech's long position.Global X vs. WisdomTree Cloud Computing | Global X vs. First Trust Cloud | Global X vs. Global X FinTech | Global X vs. Global X Cybersecurity |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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