ARK Innovation Correlations

The correlation of ARK Innovation is a statistical measure of how it moves in relation to other equities. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as ARK Innovation moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if ARK Innovation ETF moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.

The ability to find closely correlated positions to ARK Innovation could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace ARK Innovation when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back ARK Innovation - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling ARK Innovation ETF to buy it.